After cutting real paper to make paper art Christmas cards for the kids at my school I got a taste for it and started searching the net for examples.
Each shape has a subtle gradient and most of the shadows were done with the fantastic drop shadow filter (FILTER> SHADOWS AND GLOWS> DROP SHADOW) which means that your shadow will follow its object around just like yours. Of course the 3D distortion of shadows (e.g. on the clouds by the funnel) were done by hand with node sculpting.
The are many natural layers of paper in the original image and it requires lots of Inkscape layers to organise this image.
I think I did a pretty good job of showing it can be done in Inkscape. I think I’ll return to this one and add some paper texture and lighting effects in GIMP.