SO I am VERY new to smoking but from what I have learned the most important thing is to be patient and don't worry... if you think the meat is done, its NOT. :) Well as a newbie anyways :)
I had the same fears as you: I'm drying it out... I'm over cooking it... Im under cooking it... Im gonna screw this up and its going to taste like @$$, BUT all of my smokes so far have been nothing less than amazing :)
I agree with what others have said above about you pulling the meat too soon.
I do not foil so I do NOT have any advice for you on that. I have LOVED my BBQ without the foil BUT I still want to try foiling to see if I like it more or less than without the foil. I actually plan on a few coming smokes where I smoke two butts foiling one and not another to compare (and the same for ribs and briskets) :) but I digress...
Questions to ask yourself before pulling pork shoulders off the smoker:
1) If you insert a meat fork (or your thermometer) into the shoulder, does it glide into the meat with ease? This will only take you ONE smoke to determine when it glides into the meat :)
2) Is the meat pulling away from the blade bone? If you grab the bone and wiggle it with a pair of tongs, is it loose?
3) When you poke it with an instant read thermometer does it read between 197-200 degrees F?
IF you answered YES to ALL three questions then its time to pull and wrap with saran wrap or foil to sit in a cooler for a few hours with your favorite ugly towels :)
To determine if ribs are done I grab a full rack by a bone about 3-4 bones in from the in from the end and pick the entire rack up. If the rack looks like it is about to break and the meat is tearing or approaching that point then I pull it.
I would highly recommend that you grab three baby back ribs and smoke them all until you think they are done BUT only pull the smallest rack. Cook the the next smallest for another 20 minutes then pull it off and finally the last one for another 20 minutes before pulling it off the smoker. This might help in determining the texture you are striving for.
I hope this helps :)
For a point of reference: I had ZERO smoking experience and ZERO friends to rely on so I purchased Low & Slow by Gary Wiviott and just followed his instructions to develop my barbecue "instincts"
I think you can read the first 40 pages here to see if it is something you might be interested in: http://www.amazon.com/Low-Slow-Master-Barbecue-Lessons/dp/0762436093