1. Long -- A good password should be at least eight characters long. The longer the better. Passwords shorter than eight characters are inadequate today. If you are trying to improve password strength in your organization, teach people to use longer passwords that are not based on common words. One technique is also to base passwords, or better yet, pass phrases, on words in other languages than the primary one at the site.
2. Complex -- A good password should have a mix of all the four character types, uppercase and lowercase letters, numbers, and non-alphanumeric symbols. Preferably, all four should exist in a given password. Remember, any character on your keyboard is legal in a password. Using a pass phrase and interspersing it with randomly chosen characters and spaces considerably improves the strength of your password.
3. Changed frequently -- A poster from NativeIntelligence.com has a great phrase on it: "Passwords are like bubble gum; they are better when fresh." Passwords should be changed every 90-365 days, depending on the value of the asset they are protecting and the strength of the password. If you use eight-character passwords, 180 days is a reasonable change interval. If you use nine-character passwords today you can probably leave them valid for 360 days or even longer without a problem.
4. Used only in one place -- Reusing passwords significantly increases the exposure of the assets you are protecting with the passwords. Essentially, any given asset is only as secure as the least secure computer that protects that asset. When you reuse passwords the asset is only as secure as the least secure computer where you use that password.
5. Used only by one person -- Another characteristic that passwords borrow from bubble gum is that they are much better when used by a single person. If at all possible, each user on the computer should have their own account with their own password. This increases accountability and decreases exposure for the password. If you allow multiple people to use the same password you effectively give up all possibilities of monitoring their actions unless you install closed-circuit TV systems to oversee the computer.
6. Not typed on untrusted computers -- A password is only as secure as the computer or network it is used on. Keystroke loggers frequently target public kiosk-type computers, such as those used in Internet cafs, conferences, and hotel and airport lounges. The instant a password is typed on one of these computers fitted with a keystroke logger, the asset protected by the password is no longer secure.
And the most important bit from Jesper: "Writing down your password is an excellent idea as long as you adequately protect the medium you wrote it on! Doing so allows you to remember more and better passwords, thereby increasing security, not decreasing it."