It really depends on what mood I'm in at the time. In general, the characters are not the usual "Huge-chested woman fighting in a bikini" or "Huge-muscled man in a loincloth" or even "long, white haired girly man that looks like he should be in an episode of Naruto". I usually try to create a backstory in my head for a character, then create a model that fits that story.
I tend to create characters that look like an idealized version of me if the character is going to be used in a more social manner.
If it's a game like Mass Effect or Oblivion, I try to create characters that are original, characters that look like something you would find in a fantasy epic like Forgotten Realms.
In fighting games that let you customize characters (see: Soul Calibur 3 & 4) I tend to make a character that has a fair bit of armor, seeing as how it just makes sense. I will usually avoid having flowing robes and the like, but I will sometimes throw in a cape or scarf if I feel it adds to the character's appearance.
Every so often I will create a female character, in which case I will make her attractive, because if I'm going to be looking at her for hours on end, I'd rather she be attractive. However, like I said before, I don't consider attractive to be "Huge boobs, tiny bikini". I make characters that are moderately attractive, more in the line of Ashe from FF XII than Fran, or more like Cassandra than Ivy from Soul Calibur.
