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Hrm... I have to say that I often base my characters on myself, to a point, which assures me their personality is somewhat believable. Some quirks, flaws, mannerisms, etc, they can really flesh out a character, and it's as simple as looking at the people around you our yourself.
As for backgrounds... I always like having a detailed past. It forces me to be sure of what I am saying, do the necessary research before I say I'm so-and-so from Genericville. It is important, however, to give your character space to grow as you play it. Sometimes you find that an idea you had in mind doesn't really fit in, and you begin to tweak here and there.
Basically, I'm saying that I like a solid base to stand from, but I also make sure I have a ceiling that's tall enough for me to develop the character I'm playing with freedom.
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