The optical properties of metallic nanoshell systems are investigated using the Finite Difference Time Domain (FDTD) method. The method provides a convenient and systematic approach for calculating several physical properties of nanostructures, including the optical absorption and scattering cross sections as well as the local electromagnetic fields and induced charge densities near and on the surfaces of the nanoparticles. The method is applied to single uniform nanoshells as well as nanoshells with surface defects and structural distortions. The results show that, while defects can significantly affect local electric field enhancements, far field results such as extinction spectra can be remarkably insensitive to defects and distortions. Calculations are also presented for both homodimers and heterodimers. The results show that retardation effects must be taken into account for an accurate description of realistic size nanoparticle dimers. The optical properties of the nanoshell dimer are found to be strongly polarization dependent. Maximal coupling between the nanoshells in a dimer occurs when the electric field of the incident pulse is aligned parallel to the dimer axis. The wavelengths of the peaks in the extinction cross section of the dimer are shown to vary by more than 100 nm depending on the incident electric field polarization. The calculations show that electric field enhancements in the dimer junctions depend strongly on dimer separation. The maximum field enhancements occur in the dimer junction and at the expense of a reduced electric field enhancement in other regions of space. We investigate the usefulness of nanoshell dimers as substrates for surface enhanced Raman spectroscopy (SERS) by integrating the fourth power of the electric field enhancements around the surfaces of the nanoparticles as a function of dimer separation and wavelength. The SERS efficiency is shown to depend strongly on dimer separation but much weaker than the fourth power of the maximum electric field enhancement at a particular point. The SERS efficiency is also found to depend strongly on the wavelength of the incident light. Maximum SERS efficiency occurs for resonant excitation of the dimer plasmons. Specific implementation details as well as issues of numerical convergence are also discussed.