If you are a writer, you will have occasion to name your characters. While a rose by any other name would smell just as sweet, if you called a rose "fresh dog turd," chances are you wouldn't get many takers if you asked the question: "Want to smell a fresh dog turd?"
Reading a novel doesn't involve your sense of smell, not literally, so words are what you use to evoke a response. Use the wrong ones, the story might stink–figuratively, at least ...
If you write mainstream or romance or stuff set in the here-and-now, you can get away with using names you can find in the phone book. A caution, however: Don't do that. If you pick a name for a heinous character and the person you took it from reads your story, they might sue you. Probably they'd lose, but why risk it? If you must use a phone book, pick a first name from one page and a last name from another part of the book. A coincidence without any direct connection to a real person is acceptable.
Even so, whatever name you choose has a resonance, and you need to understand this. If your deadly SEAL assassin is named "Whiffenpoof" or Fauntleroy," you start out in a hole. Doesn't mean you can't pull it off, if you are skilled enough, but unless you have a good reason for going there, maybe you might reconsider.
Anakin Skywalker was called "Annie," as a youngster. Not that great a nickname, is it? No wonder he turned to the dark side.
Think of books or movies with manly men or womanly women who kicked ass. What were their names?
Generally, short and punchy names work better than long ones, and if you must give a character a long name, like, say: Seamus O'Reilly O'toole MacManus, better you call him "Mac," and get on with it.
It's also not out of the question to consider how hard it will be to type the name, since you'll be doing it a lot.
If you use half a name for your character, which in dialog and action and description and even interior monologues, you usually will, decide which any character will use. If his name is Sam Spade, then some folks will call him "Sam," and some might use "Spade." When I have my characters thinking of themselves, they tend to use their last names, but that's just a personal preference.
Also not a good idea to have all your characters named something too similar. I've been in a group of five people and three of us were named "Steve," but that might be confusing in a novel. If your book is peopled by Shirley, Sheryl, Sharon, Sam, Shawn, and Sean, you might want to consider other names. Try not to confuse your reader unless you have a good reason.
If you write fantasy or science fiction, you have a whole other realm in which you can play, neologisms, but you must take more care there than here, for different reasons.
I've come up with a few suggestions you might consider when naming people, things, and place in your made-up world.
Say it out loud. If you can't pronounce it, lose it. Period.
There are a lot of fast readers whose lips don't move when they read, but a word full of X's, Q's, Z,'s and not enough vowels to make them flow will stop a reader.
If, as in, say, Hawaiian, you have a lot of vowels and few consonants, that can also be a problem. One you can get away with; a lot of them will run together.
You do not want your reader stopping to puzzle over how something would be pronounced. Or for any other reason. If the prose is lousy, that'll do it. If you work really hard to make the prose shine, to the point where they stop to admire it? That's also bad. The tale is the thing.
Jack Vance is the example of how to do it right. He has long and sometimes complicated-looking names for planets and places and creatures upon them, but all are easily spoken aloud. This is key. If you can't say it, don't use it.
Oh, really, Steve? This from the guy who gave us "Xizor?"
Yeah, well, I presented it, but it wasn't mine, and I made an effort to tell readers how to pronounce it by having a chair's computer offer a slurred version of it. Sometimes you work with a term you didn't create, and you just have to make the best of it. ("She-zor," by the way, is just like "razor," but with "she" instead of "ray." From Portuguese, I think.)
Readers don't have to know what a term means at first glance: My first novel was The Tularemia Gambit, and not everybody knew was tularemia was, but they could pronounce it. I told them all about it in the book, so by the end, they knew what it meant. (It's rabbit fever.)
Consider a foreign language for a consistent sound. In the Matador books, I used Swahili. My dictionary wasn't always dead-on, I found out from somebody who speaks the language, but the flavor of the names was relatively smooth and even. You don't have to do this throughout, there are a lot of polyglot cultures, but look at Dune, then a map of the Middle East from forty years ago, and you'll see where Herbert got most of his flavor for that book.
The dunes came from the Oregon coast a few hours south of here.
You can make the name mean something in foreign language. Many of mine do. Spetsdöd means, more or less, "point-death." Teräs Käsi, means "steel hands." "Dirisha Zuri," means "window to beauty." ("Dirisha" came out of my head, and just happened to have a meaning in Swahili, and I added "Zuri," to complete the effect.)
All female characters don't have to have names ending in "a" or "i," but since that's big in romance languages, it's usually acceptable. Tazzimi Bork, Saval's sister, I called "Taz" all the way through those books when she appears.
Must meanings be precise? Nope. You aren't writing a phrase book. Sometimes, I switch out a letter or two because it sounds better to me.
Don't throw too many jawbreakers at the reader at once:
"In the Slplxyl System, the fourth planet of Doehgpw, in the underground city of Wfjs'ppl, there lived a race of giant reptilians, the Uhdytsl'higex ..."
Bad idea. My wife doesn't read fantasy for this reason. Every time she picked one up to try, she got an eyeful of gobbledegook like that previous graph. And none of those names work, by the by. Like the villain the old Superman comics, the imp from another dimension, Mr. Mxyzptlk, who had say his name backwards to be banished. I always saw that as "Multiple X," even though that's not within a parsec of how to say it: mĭks·yĕz′·pĭt·l·ĭk.
Made-up words are like hot peppers. A few can make the story pop. Too many kill your reader's appetite for the rest of your tale.
There are some other things, but I think that's enough for now.
Oh, wait. The picture. In Nabakov's classic, Lolita, the narrator, one Humbert Humbert, came up with the name "Lolita," for the little girl he molests in the novel. Her real name is "Delores." Wouldn't have had the same ring as a title, would it?