Measurements

IMO one of the most important things to do before you build, especially if you are stripping parts off another bike (particularly if from your daily rider), is to take measurements. This would be good info to log even if buying a bike off the showroom floor. Park Tool's web site had a faily concise list of these measurements that was a good reference. The link is no longer active so I'll tell you the measurements I took:
1) Seat height: center of bottom bracket to top of seat (along seat tube)
2) Saddle height over bars: subtract the height of ground to top of saddle from the ground to top of grip
3) Saddle to handlebar: front tip of saddle to center of handle bar (at the stem)
4) Saddle angle: lay a clipboard or other flat object on the saddle and use an angle finder to measure the angle
5) Saddle for/aft: Drop a string down from the front tip of the seat alond the side of the bike (weight it with something). Measure haw far the string is before/aft of the center of the bottom bracket.
6) Stem length: center of the bars to center of the securing bolt/center of the upright.
7) Stem angle: using the angle finder again, measure the top angle of the stem. If it's too short to fit the angle finder, you might have to lay a ahorter spacer on the stem to space the finder.

I know this all sound way too complicated but any measurements you can get that can be repeated on the new build will do. These are simple and tend to cover all the bases.
The benefit of doing this is that if you take measurements from a bike you like, you can replicate them during the new build and the bike will fit well on the first ride. Not that you won't tweak it a bit, but you don't want to have all sorts of introduced feedback from your new ride when you are trying to isolate any gremlins from components, feel of the new frame, etc. This is just my opinion but it sure has saved me a lot of frustration. I felt no need to adjust the new bike on the first ride at all! I was already fitted to it so I was able to pay complete attention to how it shifted, braked, climbed, etc.
Addition: I found this info on Park's site. It's weird. You can't find it directly, you have to stumble accross is and link into it.

http://www.parktool.com/repair/readhowto.asp?id=72

There is a PDF file that's a great record!

Getting started

The first thing you must do, once you buy your frame, is photograph it. This is best done in a cool environment and/or around cool objects. Hanging it around your neck is okay. Including animals works well. Here I photographed the older Masi frame with Grace (Grizzle to her friends). A nice colorful Parrot on the top tube is a nice touch. Showing small kicking dogs....not so much.





I ended up going with the older Masi frame as a backdrop. This was done for fun, to motivate me to get done with this so I can build up the older frame, and to compare geometry between the two 56cm bikes - very different indeed. Also, Grizzle is impatient!
Also, while it is apart, you can wax the different components, fork and frame. I used one coat of cleaner wax and two coats of carnuba on the frameset and and one coat of carnuba on the carbon parts of the components. Does this help? Absolutely. Studies have showna 3-5 mph difference. Actually, I had just never waxed a bike before and this seemed like th right time. I do have to say that after the first 22 mile test ride, the thrown chain oil sure wiped off easily.

Picking a frame

A great thing to do is to modernize an older bike. There are purists who say not to do that to a classic. Generally, I would agree as there are still tires and parts to keep these things serviceable while retaining their collector value. On the other hand, you have to do what will keep you riding. Paying the LBS to add a new group and letting them keep the "old junk" is a complete no-no. The truth is there are many older classic bikes out there that have been broken apart for profit. You see tons of classic frames and parts for sale on forums, lists, and Ebay. Put them all together and you'll have lots of classic bikes but still a lot of leftovers. I say use them just don't be part of the problem buy being such a hack. So if you modernize, keep and lable the parts so that they can return home when the time is come.
You have to decide what frame you want to hang all your parts on. Most mid-level frames today are mass-produced aluminum. The higher end stuff starts to add carbon forks and seat stays, then eventually they go all carbon. The days of handbuilt frames in the local peloton are essentially over. There are still great framemakers out there if you can afford them, and handbuilt framemaking is truly an art. Buying an older handbuilt frame, though still expensive, is an option.
If you are stuck on an Italian, French, or say Belgian frame, good luck. Most famous brands have long since been bought up and are now part of a conglomerate of brands. Because of outsourceing, even Trek(the great american bicycle company) has a majority of their frames built overseas. Your favorite manufacturer is likely no different. I'm told Trek actually owns their overseas factories so quality can be better controlled but this is hearsay. Unless you buy the top Trek, it's made in China or Taiwan as I have seen both.
Companies like Kinesis(Taiwan and maybe elsewhere) makes frames for many competing brands here in the USA. Basically what it boils down to is you have to decide what name you like on your shiny new Kinesis frame. A similar practice actually goes way back to handmade Italian frame days. Many winning GdI and TdF bikes were painted and relabelled differently than their actual builder. Fair game to this day, I guess.
I liked the Masi name on my new 0 miles 2006 Kinesis frame. I got it off Ebay and it came with a carbon fork and headset for around $200. It is new, straight(go look at a WalMart bike!), as light and high tech as the next guy's, a bit different, and I like Masi(or at least what Masi once was). Pick your brand and look around. There is a price point for everybody.

You wanna build your own bike?

There are several reasons to build a bicycle rather than buying one pre-assembled from a shop. First and most importantly, you might not find one with the combination, style, or vintage of parts you want or a frame you like. You might want the lightest thing around and with one high dollar part will often come another - it's easy to find $5000 bikes out there. Also, you might have an old frame or some older parts around you want to put to use. If you are like me, you are a control freak and want to do everything yourself. This is simply an underlying ploy to stock bragging rights for later. I would not recommend building to someone who has yet to find the "right fit" with another bike as that will influence what you buy - type of shifters, frame size, stem size, etc. The last thing you want is to finish it and have it just not feel right.
The benefits of building your own bike are numerous. Despite what you read, you can save some money, assuming you would have to pay a premium for getting the components you actually wanted swapped for you (I've not seen lots of SRAM Force components or Masi frames in the Kansas City area). Sometimes you don't need a brand new component set for an older frame - something period-correct might float your boat. You might opt for a NOS part you find on Ebay or want to reuse your lightweight wheels, favorite seat, etc. Also, today's service being what it is, you can ensure that the parts you purchase are actually what you thought they were(who knows which bottom bracket is actually in there?), that the parts are installed correctly, and that they are going to stay on the bike! My GF's Cervelo came with Ultegra, 105, and diacomp stuff - not only different series of Shimano parts, but even a different mfg. No biggy but if you think you are getting an all DuraAce bike and it shows up with an XT rear derailleur, you should be angry. Most importantly, you know how the bike works and how to repair what might go wrong later. Things like derailleur adjustments will no longer be intimidating. As a side note, most new bikes are delivered to the LBS pre-assembled. They finish the assembly and do adjustments but I don't think it is common to remove high-end parts for cheaper stuff laying around. Remember, your LBS (local bike store) does have to pay a substantial amount of overhead to be there for the community. Don't blow them off completely just because they aren't the dirt cheapest you can find online. That said, I bought most of my stuff online. The availability just wasn't there.

Start off by defining your goals vs. your budget. Lightweight road bikes are all the rage but they are not meant to endure curbs, potholes, or any abuse. Mountain bikes re cool but heavy and overkill for about 90% of those who own them. Perhaps a cyclocross style bike would be best if you ride on the road but go offroad at all. Titanium and full carbon frames are cool but again, they are overkill for most of us. Titanium is comportable like stell but remains light, carbon is the same. Both are exponentially more expensive than a modern aluminum frame. Except for the early 80's Ross 10-speed my parents bought me, I've never owned a new bike, let alone one like you'd drool over in the "expensive section" of the LBS. I won't test ride bikes just for the fun of trying them so if I wanted to feel what a new, high tech bike was like, I'd have to build it myself. As for my goals? Personally, I wanted a lightweight bike (under 20lbs) that had smooth, new, top-end components in a package that could later be raced. For me, if I couldn't do that, I'd rebuild an old cruiser or vintage lightweight racer. I didn't want to spend $3000 but as I knew I could accumulate parts over time, $1500 might get me what I'd pay $2000+ for in a shop. You'll soon find out that "light weight" =$$. It's a small jump up to a nice groupo, say the Shimano 105 group (still light by most practical standards) but it get's exponentially more expensive for each gram you want to save beyond that. Twice as expensive does not mean twice as light. Someone once said, "Strong, light, cheap - pick two."

Have fun and don't take yourself too serously. Here's a good blog about cycling that is a hoot to read:
http://bikesnobnyc.blogspot.com/