I used newspaper with organic mulch three years ago in my sfg and they did just fine (and they looked lovely). I'm doing the tomatoes in swc's now, and our area is pretty mild, so I don't use any mulch on them now.

I'm not sure how much of a barrier newspaper would be to a squirrel.

As far as the second question, if you have not added mulch in the past, then you should end up water less frequently (but still deeply) with mulch of any kind. If you mulched in the past, then I would say that your watering practices should not change significantly, after all, the newspaper won't last too long until a layer of mulch. It will break down and be no different than using a compost as your mulch.

I've used newspaper around my tomatoes and covered it with mulch/pinestraw and it worked great.

I have not tried using newspaper as mulch, but I just read about it as a suggestion in Mother Earth magazine Feb 2011 issue and thought it sounded like a good idea. I imagine, as one poster mentioned here it would be similar to using compost to mulch.

Here is a link that might be useful: A Minneapolis Homestead

Hi, we tried our own version of lasagna gardening last year. We laid newspaper around our tomato and okra plants, threw on some homemade compost (no exact science at our house), and then dried grass clippings on top. We had tomatoes when our friends had none. Our okra did fantastic, but it was our first time growing it and I keep hearing it was a good year for okra anyway.
We haven't had a squirrel issue in our garden, so I don't know how that would work out for you.

I use newspaper and straw around most of my veggie plants. It has worked well for me. Newspapeer is easy to cut or tear into strips that fit easily around plants. Like others have said I don't know if it will keep squirrels out but you would most likely see where they have dug very easily.

Good gardening, Mary