I always have fun when naming my characters (and no one else can argue about it—unlike with my children—can you believe my husband wanted a say??). I own 5 baby name books, and am frequently on the Social Security website, checking out popular names. My favorite book is From Aaron to Zoe, 15,000 Great Baby Names, by Daniel Avram Richman. I also use the phone book and take note of everyone's name tags at restaurants, hotels, airports—you see some interesting names (I always try and ask the person what their name means). Even newspapers, magazines, and books can yield a perfect character name.
One of my requirements when choosing a name is to find one that has a special meaning. My main protagonist in Poison Study, Yelena is a Russian name and it means "shining one" which I thought appropriate since she starts out in a dungeon awaiting execution. Her situation is dire, but she still shines. My assassin/chief of security's name is Valek. I always liked Val Kilmer in the movie Top Gun—so Valek is a composite of him.
Some names I do make up:) For Magic Study, I wanted the Sitian people to have earthy names so I chose Fern, Irys, Roze, Leif. I also seem to like jewel names—Perl, Topaz, Garnet. One of the characters is, Cahil which means inexperienced (so that should give you a hint about his personality).
When I'm starting a novel, I'll decide what the theme is or the overall feeling of the novel. Then I'll comb through my baby books and write a list of names both male and female that fit into the theme. For Storm Glass, I wanted powerful names and ones that had meanings about the sun, wind and rain, so my list included Kade (powerful), Raiden (thunder god), Nodin (wind), Aydan (little fire - he's my glass maker), and Ulrick (ruler of all). All these names are listed in the baby book and they were so fun to find!
I know there are writing books available about naming your characters. Also when deciding on names, I try and avoid weird spellings and unpronounceable names, basically because I don't like it when I'm reading a book—it stops me dead as I try and figure out how to pronounce them (guess I shouldn't have daydreamed when my class was learning about phonics in 6th grade!).
And sometimes, my editor makes me change a name. In Magic Study I had Gale (Tula's sister) and Goel (bad dude) and she said I had to change one because they were too close and could confuse the reader. So I changed Gale to Opal and then used the name Gale in Fire Study since Goel didn't.…er.…isn't in that book.
My son also pointed out to me (he's reading Magic Study now) that I prefer short names, which I hadn't realized, but when I thought about it—is very true. Guess I don't like typing long names!