Choosing a Domain Name is much harder than many people realise.  You Domain Name is the name that people will be typing into their browser to look up your site.  If it's a business site then this is the name that will be appearing on your advertising and signed at the bottom of every email.  It might seem easy to just make up some simple words and there you go but you are competing against literally millions of people before you who have tried to think up a nice simple Domain Name and it's just fact that most of the good ones are already gone.  So here's a few tips to help you on your way.  The following tips are most important for business sites but they still apply to personal sites too.

Choose something simple

Remember that this is the name you will be giving out to people over the phone, in advertising etc.  It should be something easy to spell and easy to understand.  Try to choose simple words that cannot be misheard and which are easy to remember.  A name like overthere.com might sound clever for a travel company but there are three ways to spell 'there' each with a different meaning.  Try to avoid letters that can be misheard, so if you are giving the details over the phone each letter can be clearly pronounced and heard.  Especially with bad reception on a mobile phone or Skype it's easy to hear d as t, b, p or even e.  But if it's a simple word that people easily understand the pronunciation of letters isn't as big a problem.

Choose something that describes you site

Search Engines tend to like referencing Domain Names that actually sound like the content but this isn't your biggest issue.  The average search brings up pages of results and most people skim the pages for something that looks appropriate.  If you were looking for a travel agency would your first choice be overthere.com or easytravel.com?  (Hint, one is a real site, the other isn't)  By calling your site what it is it helps people trust that when they click that link they will get an appropriate result.  I know, my site doesn't reflect this rule but you try thinking of a name that involves web design and hosting! 

Make sure it means what you think it means

Many Domain Names are just made from cramming a couple of words together, but this can cause problems.  First of all, with so much slang and jargon out there it's easy to use a word which might have another meaning on the internet.  For example you might make fantasy figurines so you might go for a name like trollshop.com.au, but in internet terms a Troll is someone who says outlandish things on web forums just to upset people.  Enter in your name into a browser search and see what you get before you use it as a name.  The other issue you need to be aware of is that when words are run together they can create new words.  
 

.com, .com.au, .net. .info, what do they mean and what should you get?

A Domain Name consists of a number of labels separated by full stops or 'dots'.  If a domain name has .au on the end this indicates it is an Australian Domain Name as the .au is the label assigned to all Australian Names.  Yet there are many other labels that are just considered generic labels and these include .com. .net ,.info and more.  You can have any one of these generic labels anywhere in the world and they tend to be a bit cheaper.  Yet Australian Law protects Australian names so the labels indicate something about the owner of the name.  For example, in order to have a .com.au you must use that Domain for a registered Australian business.  If you don't have an ABN then you may not have the .com.au.  If you want a .org.au then you must be a part of a registered Australian Organisation (.org).  So, if you are using your site just for personal reasons then stick with one of the generic labels as they are cheaper.  However, if you are an Australian business then a .com.au immediately tells people you are a registered Australian business.  Here's the basic meanings behind the most popular labels:

.com = company

.org = organisation

.tv = television

.net = network of internet service

.info = information service

What many people do and which I also suggest you do if you are on a budget, is start with a simple generic .com to get things rolling.  If things look like they are going well then register the .com.au.  Most decent internet hosts allow you to add extra Domain Names to your site at any time so this isn't really a problem.

Make sure your name isn't already taken

When you register a name a check is always done to make sure no one else has it registered, so each Domain Name is unique.  But you should also be careful about trying to register a name that is in common use by a business which might not yet have a website.  Not only is it polite but it can save having your name stolen out from under you if you are late paying for the Domain Name registration one month.  There are entire companies who are built around the idea of snapping up names people will want in the future, then they sell those names for a substantial profit, but unless that's your business stay away from it.  Which leads us to ...

Should you purchase an already established name?

There is a common field of thought that you should purchase a Domain Name that has already been well used before.  The idea is that as the site is already registered with all the search engines and many people likely already have it bookmarked that the site will have high traffic from day one of you taking it over.  In all honesty I think this is wasted money.  It's true, you might gain extra traffic to your site but this is one case where the buyer must be very careful as these premium Domain Names can cost thousands.  You need to weigh the price against the perceived gain.  Keep in mind that you are not just buying that Domain Name but it's history, and if the previous owners got rid of the name then maybe they had a good reason.  You don't want to start your new business venture with people already thinking "Oh yeah, aren't you those guys that got taken to court for fraud?"  As for the name already being registered with the search engines these days that really isn't a big deal.  The search engines will tend to have you picked up within a couple weeks and providing to do the right things your search engine ranking will sky-rocket quickly.  So in my honest opinion with the rare exception you are better saving that money and establishing your own name on the net.

So, take care in choosing a Domain Name.  Keep it simple, make it descriptive and be sure you can establish that name as your own individual identity on the Internet.