Have you ever decided to start a new toon, got all of the features exactly how you wanted them, the colors just right, and were totally happy with the looks, only to get stuck on the character's name? I've had to deal with that a few times, to the point where the server would disconnect me for prolonged thought and subsequent inactivity. I'd have to start character creation from the start, just to have the same thing happen all over again a short time later! /sigh. The naming obsession may be a little extreme, sure, but your character's I.D. is a very important piece of the overall package that is you. And it doesn't matter if your toon is decked out in Tier 6 gear and looks sexy as hell -- if his or her name is "MWAHAHAHAHAHA" or "Wownightelf," you'll likely get a little bit of flak, and deservedly so. It's no wonder then that many players take great care in choosing names for their in-game counterparts, often investing much time in finding the one that's just right for them. Some methods lead to more effective name-picking than others, however, and being that I'm an expectant father and newly seasoned at the naming game, having named our child 6 months before he or she even shows up, I'll share some of my secrets with you. ;)
First, you have to start with the obvious question of gender. Are you choosing to create a male or female toon? Names are VERY gender-specific, generally speaking, and specific letter placements usually indicate one gender or another. For example, placing the letter "a" at the end of a name is usually characteristic of a female name, as a Warlock on my server named "Darcla" understands well after about the millionth person assumed he was a she. So yeah, understanding the specificity of names is a very important if not the most important variable you can consider. After all, most baby-naming books are organized by gender first and foremost for a reason.
Second, you must consider the "feel" of your race and class. Just as many names are specific to certain groups IRL (hippies, etc), your toon's name should be indicative of his or her own background. What kind of message do you want to send with your name? Think about the roughness of the race (or lack thereof), the finesse and approach of the class (melee vs. magic), etc, and start thinking of words associated with those characteristics. This will sift through a lot of potential issues, preventing an Orc Rogue from being named "Sylfirestorm," for example. And as you've probably already noticed, this automatically takes care of the "lore" issue, and even if that's not a priority of yours, that will improve the overall "HUZZAH" feeling that your toon's name generates.
Finally, if you're having trouble coming up with words, think about meanings and emotions that you want your toon to inflinct, and then look up words associated with them. This takes a little bit of research and effort, but in all reality, it's not that difficult, and I find that it helps to make for a decently complicated name that is probably available on whatever server you're playing on. A few good sources to start with would be a medical dictionary (my favorite), astronomy journals, or even something as simple as a thesaurus will get the job done. And you can end up with a very interesting and significant name to say the least.
There are many other things to consider when naming your toon, but I'll leave those for a second post. At this point, just remember to have fun with it and not sell yourself short. A funny name that takes very little effort to come up with may be creative and get the job done, but it'll never be as fulfilling as one with UMPH. So take your time, think about it, and do your research. If you do, that's one less name change you'll ever have to worry about. ;)