... depends?
In games, where there is some "homo-sapiens-normativity" (e.g. The Secret World, EVE), I tend to approximate my own looks (handsome devil that I am). In more species-diverse games, I tend to go for whatever look I happen to find appealing.
Those are not ironclad rules, as I made a "mini-me" in skyrim, just because I didn't find the *-mer races optically appealing, and back in the day, when I started WoW, my only thought was: "Huge awesome Minotaur guy! Alli-who?". But then, WoW humans do look... bad, the males at least.
EDIT: Oh, and if it *is* human-centric (?), but "designed" to be out there (superhero games like DCU Online, City of Heroes), I just go nuts and try anything from Gay Fiery Angel-dude to Tiny, Ridiculously Strong Mummy-girl.
As to how I play them? Depends on the amount of freedom I have. I will play anything from paragon of righteousness to the meanest dirtbag if it comes to me naturally with the flow of the game. In badly written situations, I tend to go with the "intended" choice. Like in Jade Empire, I tend to play Open Palm, even if I do like the Closed Fist *philosophy* more - but because the writers only give you "righteous dude" and "ridiculous, moustache-twirling sociopath", I tend to go with the result where I don't feel punished for my "equally valid" choices.