The role of a photospheric component and of pair breakdown is examined in the internal shock model of gamma-ray bursts. We discuss some of the mechanisms by which they would produce anomalously steep low energy slopes, X-ray excesses and preferred energy breaks. Sub-relativistic comptonization should dominate in high comoving luminosity bursts with high baryon load, while synchrotron radiation dominates the power law component in bursts which have lower comoving luminosity or have moderate to low baryon loads. A photosphere leading to steep low energy spectral slopes should be prominent in the lowest baryon load