Panning is a good way to capture motion...but it's not the only way. Imagine shooting a car coming straight at you. Panning would not work in this situation. Instead, use a very high shutter speed (like 1/1600th or more) and try to get mutliple cars in the pic to capture a sense of "racing". If you're lucky you might even get to capture the heat vapors or smoke trail coming out of a gas car. And onroad cars can also get their wheels in the air during turns. Examples:

I normally shoot from the sitting position. Or I try to find a spot near the track that is lower elevation so that even if I stand up, the camera angle is still very low to the track.

For example, I took this picture while standing:

Explanations by Xtreme RC Magazine Photographer

There are many ways to capture motion. The most common is to pan with the car. Pick a spot on the track where you think the car is going to be and manual focus there (you can auto focus too, but I like to eliminate that variable unless the driver is missing the line). I shoot around 1/500 to 1/800, depending on speed, DOF, etc. This slightly slower speed creates motion blur without being too much. By panning you are trying to move at the same speed as the car and this helps to freeze the car, but since you are moving across the background, the background blurs. Shoot tight and crop a ton. The key here is to capture "the shot" and unfortunately you will create a lot of throw away shots, but that's the price you pay. I try to shoot low and I almost never use a tripod or monopod, but that may be personal preference. Shot with telephoto around 200mm (which is longer with digital) Example:

Another technique is to use ambient light with a flash during the day. Shoot at 1/60 or slower and pan with the car. Use a fill flash and the strobe will help to freeze the car, but the background still blurs since it is such a slow shutter speed and still exposing the frame. A good idea is to shoot your ambient exposure at about 1 stop underexposed, so that you don't create too much streaking (if that isn't your intention). I shoot with the flash in manual mode and +/- depending on my desired outcome. Example:

You can also do the same thing with a flash off camera by radio slaving it. You'll have to shoot with the flash in manual mode and have a good idea where the car will be, but you will get some interesting lighting affects. Remember, this was shot in bright light in the middle of the day outdoors. These last 2 examples were shot with a wide angle lense (16mm which is 27.2mm with digital cropping) pretty close. Example:

Here's an example indoors with slaved flash. In this case, 2 flashes slaved, one dominant and other lesser, both with diffusers. Since this was a mini-z and so small I shot with a Nikon 10.5 mm fisheye. Because there wasn't much ambient light, I did a much longer exposure; probably around 1/2 second and panned and panned back to try and put some of the ambient light blurs behind the car. I don't always like to use rear curtain cync since with such a long exposure I don't like losing that flash timing control. I just shoot with pan/flash/then pan backwards. a two stage pan. Example:

Last one outdoors, slightly shadowed with fill flash slaved with Pocket Wizard MultiMAX. Example:

Panning is probably the most common method and you should have good success with it, just be prepared to throw some away. This one is panned with the car with standard daylight behind me; nothing fancy.

Have fun too. Don't be afraid to experiment a bit. This shot is done with fisheye with night background with about 2 second exposure to grab some lights in background and create streaking with added fill flash on camera. Just used the diffuser over the flash head unit. Not onroad action, but all these techniques can be used different ways.

Commander Mode?
For example, the Nikon D200 can be put into Commander Mode to allow the on-camera flash to trigger an off-camera flash or flashes. However, if I recall correctly, something like the Nikon D50 does not have the Commander Mode, but can still use something like the Nikon SB-800 Speedlight Flash on-camera to trigger other Speedlights off camera. This basically eliminates the need for something like a Pocket Wizard since the camera body/flash triggers the other flash units.

I don't use commander mode. Not to say that you can't, but it probably has to do more with my equipment. In the past, I shot a lot of action sports including skateboarding, BMX, MX, etc. as well as studio stuff. The choice for portable flashes were (and still are to some extent) Sunpak 555, Quantum Q Flash, and Nikon SB-28 among others. Because of the combo of flashes, not all were compatable with this new Commander system which hasn't really been out that long. Also, it was important to shoot sequences with strobes that could keep up. With Sunpak 555, you can turn the power all the way down to 1/64th of full and shooting around 800 to 3200 ASA you can shoot full sequences at 8 frames per second and the flashes can keep up. Of course this was done with film cameras, in my case the F5. We'd often shoot Kodak 1600 B&W and push or pull too. Now in order to do this, we had to shoot with 2 or 3 slaved flashes in order for there to be enough light, but still cycle enough. Problem is only a few radio slaves could keep up. Quantum Radio slaves are pretty good, but only come in 4 channels, which isn't good when shooting with other photographers at a big event, etc. That also means no optical slaves that can be triggered by other flashes on other cameras including point and shoot cameras. Pocket Wizards are good to, but won't send a signal at 9 frames per second. The Pocket Wizard Max will do all this and have little radio interference. The older Radio slaves were plagued with radio interference coming from Supermarket automatic door openers, etc. Also, on shoots including shooting at places like LA where the Lakers play, there are built in overhead strobes that photographers have to use so that they don't blind the players and a nice studio lighting for all the pro photogs. If you look at Sports Illustrated, you'll notice the lighting is very consistent and perfect every time. They just clear you for the frequency and you are set, no flashes necessary, just MAX. I also use the system in the studio with my studio strobes. Lastly I also shoot with a Hasselblad, so I use the same strobe set up. Basically to answer your question, you could use the commander mode, but I have little to no experience with it and haven't pursued it more due to it's limitations for what I need. Your needs may be different. BTW a D50 can use Commander mode if you buy the appropriate hardware. http://www.kenrockwell.com/nikon/su800.htm

Explanations by itFitz Design

1. I typically use panning, but as mentioned, there are MANY techniques that you can use.
2. I try to shoot as level with the track as possible, sometimes even on my stomach. I only use a tripod if I want to duplicate a specific shot such as "the line" through an S corner, or if there is a good battle going on and the two cars are always close in the same corner.
3. Yes, the blur is created by using a lower exposure and panning with the car.
4. I typically focus very tight on the car (300mm lens) to avoid having to crop the photo later.
5. I have not shot indoors as of yet, but I would probably start with an ISO of about 200 or so and experiment with fill flash. Maybe bump up the ISO depending on the lighting conditions.
6. There are some great tips here in this thread that I have yet to try. I would suggest looking at exif data for some of the pictures that you find. this can give you a pretty good reference to start with.

I forgot to mention, when shooting head on shots, try to find a "trouble area" of the track. This yields some interesting action shots. Like this one I took last race.