Thats a great start buddy.....there are many ways to create a folded looking cloth in PS.  The simplest way is by using the gradient tool with a B&W gradient.  Just make an image 500 x 500pix then fill it with a colour of your choice and add your gradient.  Its then just a matter of changing the layer properties to get the look you want. Personally, I prefer to use my own technique which involves the Pen Tool.....Its a bit long winded but the results are cool.

Anyway, this is what I knocked up for you....once you have your gradient folds you can manipulate them by using the warp tool or whatever else you want to use to drape the whole thing around your model. Don't forget cloth is generally a very soft medium this must be reflected in your work to make it look realistic.

The cloth on your model has way to many pronounced folds maybe just one or two would work!