Ruleset core books: PHB, PHB2, DMG, DMG2, the Power books.
Guiding rule: I generally allow anything that doesn’t destabilize the game. I encourage player improv and creativity, but I’m trying to run a game here, so I may occasionally disallow something that I can’t handle. Sorry!
Allowed classes and races: anything from the above core books. Race and classes from other official D&D works may be allowed, but need to be reviewed by DM and may be vetoed. If you don’t have all source material on-hand, that’s an automatic veto. In other words, no incomplete classes such as the preview exerpts for the upcoming PHB3.
No evil alignments or worship of evil gods.
The world: open and undefined. I’m a “fill in as we go” kinda DM, so I won’t be handing out world maps. I encourage you to define the region where your PC comes from, in as little or much detail as you want. If it’s really compelling, maybe the plot will visit there eventually!
Pantheon: D&D canon. Bahamut is a dragon god, Moradin digs (ouch) the dwarvens. The plot keys off the pantheon at some points, so no inventing gods. You can invent your own splinter religions and sects, tho.
Your backstory: Your backstory can be whatever you want it to be. I encourage collaboration, so if you want to have a relationship to another PC, such as brother, rival, or (gasp)ex, then do so. It has to be sane, of course: no kings in hiding, no teamkilling.
The setting: “It is early winter. You have arrived in Lamat, a small port town in a backwater region. You have a voucher for passage on a merchant vessel, the “Wave’s Eyes,” scheduled to soon depart the town.”
It’s up to you WHY the PCs want to board the ship. To drive the initial plot, it only matters that PCs want to do so. Of course, the PC’s goals will be derailed by the campaign plot. So avoid “I must reach the city of Halgarath in 6 days or my sister will be killed,” because you ain’t gonna make it. (Unless you want to roleplay some pathos.)
There are two things I would like you to think about, but neither are required:
Personality: What’s your view on authority? Are you a nice person? Do you have quirks? What’s your motivation in life? Riches? Fame? Do you want to live forever? I can’t make promises, but a good personality can inspire new plotlines.
Backstory: How did you get where you are? How did you learn the skills you have? Do you owe, or fear, anyone? I’m also allowing the “background” option in PHB2, pg 178. So a good backstory also grants you a permanent +2 skill bonus.
In addition, occasionally your backstory may grant you a situational bonus. Grow up in a fishing village? You could get a bonus to plug that leak in your lifeboat.