Dont know if anyone uses the smudge brush in photoshop, and Im not sure whether the new CS6 contains a blender brush tool or whatever, Im going to share something Ive explored in PS via experimenting with the smudge brush itself.
Its difficult if not impossible to use the smudge brush for painterly blending effects. However with enough adjustments and experimenting you can find a style of blender that may fit your wants.
Layering color over color again is a long process and can become boring, which is why many art software developers create some form of blender in their programs. Some, like in SAI have a well amazing range of smooth transitions from hue to hue, while others appear like smearing paint.
Basically all you need to play around with is to keep down the strength of your smudge brush down to a generous 10% or LESS, and higher if you want to drag colors around.
Turning on the scatter option in your settings will boost this effect, and again it all comes down to experimenting. Alas it isnt possible (yet) to gain a very smooth blend with this tool but it can make up for cool visuals.
Maybe CS6 has an option for this without need of the smudge brush? I will have to find out.