I love mixing playlists.  Way back in the day, I got the biggest kick out of having a dual cassette tape deck that allowed me to record from one cassette onto the other.  I delighted in creating my own compilations that way, which if you've never tried it, is far more painstaking than dragging and dropping files within iTunes.  For starters, you have to let the song play out in its entirety, meaning that your mix will be recorded in a minimum of real time. You want 45 minutes worth of music on Side 1, you're going to sit through 45 minutes worth of music!  Plus, you've got to cue each song to the beginning, and get down the timing of knowing when to begin recording and when to stop.  Some of the more advanced tape decks at least synchronized that part of it, but many required you to press Record and Play simultaneously on one deck and Play on the other.  I liked to buy cassette singles (marketed under the portmanteau, "cassingle") because they often featured unique edits and mixes, as well as non-LP tracks. I remember buying every "cassingle" from Bryan Adams's Waking Up the Neighbours released between 1991 and 1992, and then compiling all of the non-LP material onto a cassette.  It was practically an entire second album!

Anyway, here on this blog I periodically post playlists as I compile them.  There are no files uploaded to this blog so if you're hoping to just pirate music, bugger off.  I respect artist rights in all media.  I have, however, indicated where a song originated and in many cases I have provided links to purchase the song from Amazon.  Unless otherwise noted, each playlist will fit on one CD.  In the digital era there's really no obvious need for such restrictions, but I find that having time limits are very helpful to whittle a playlist down to its essence.  Otherwise, it's just an ongoing parade of songs that loses focus.

My philosophy when compiling playlists is pretty simple.
Never mix for yourself.  Chances are, you're going to play this with friends around at some point, whether driving or hanging out with a bottle of wine.  Never just load up on obvious songs and dump them into a playlist.  Ask yourself at every turn whether this song selection is going to keep someone else interested.  If you're worried that your friend will just start telling you the same story you've heard from him since childhood because he's bored and waiting until it's his turn to pick a CD to play, you've got problems.
Balance of artists.  If a playlist is built around numerous artists, only one song each.  If built around a smaller number of artists, maintain a reasonable proportion.  Moreover, be very careful about mixing genres.  If you've got a few gangsta songs on a mostly-50s pop playlist, it's not going to work.  Homogeneity is paramount. 
Sequence based on how well the beginning of one song sounds after the ending of the previous song.  Your ear won't hear the middle of the song, so forget how cool the guitar solo is.  It'll still be cool elsewhere in the playlist.
"Call and answer" can be fun to incorporate into a playlist.  For instance, if one song was intended as, or can be interpreted as, a response to another song on your playlist, put them back-to-back.
Sometimes it's okay to just combine like titles.  If you see two or more titles each containing a unique word, maybe they can be sequenced back-to-back for effect.
Sequence in threes.  No group of three consecutive songs should exceed 12 minutes.  Never have more than three consecutive songs share the same tone.  It might seem like a good idea at the time to put four ballads together, but they'll become an absolute drag to hear.  Move the fourth elsewhere and replace it with something lighthearted.
Show off how big a fan you are.  Don't rely exclusively on singles released from that artist's studio albums.  An album cut can be perfect for a playlist, and it shows that you've actually listened to more than just what everyone else has heard on the radio.  There are countless album cuts that probably should have been singles.  Also, artists tend to contribute to other projects from time to time.  Whether it's a tribute album, soundtrack or just a guest appearance on another artist's work, these kinds of songs add depth to a playlist.
Show off your library.  If you've got various mixes, edits, non-LP cuts, etc., feel free to incorporate those into your playlist.  These kinds of things add a certain dynamic to a playlist that says, "I wasn't just put together from the studio albums everyone else owns."  Just remember not to force them into the playlist.  The dance club remix might be hard to find, but if it's incongruous with the rest of your work, it's best left for another playlist.
I also try to sequence as though for a concert.  What's a good song to open the set with, and how should it close?  Should there be an encore?  If so, what?  Where should duets be placed?  Personally, I like to open playlists with either songs that weren't singles or are non-album mixes or edits of familiar songs.  I also like to pick songs that open abruptly and loudly.  Sometimes a song with a specific build-up works best to get things going, but I also tend to use those kinds of songs at the end for an "encore," in tribute to all those times that the band comes back on stage and teases until the vocalist finally returns for one more song.
Duets are kind of funny.  If there's only one, I like to put it near the final 1/4 of the playlist.  If more than one, I like to space them out somewhat equidistantly for structure.  Sometimes you'll find another song on your playlist was a cover of the duet partner's song, or that the duet partner wrote it.  I like to use that song just before the duet when possible.  I imagine in the hypothetical concert that the performer tells the crowd about how that's a cover of, or song written by, the other artist and "oh, by the way, that artist is here!"  Cheesy, yes, but I think it works.
Live tracks are problematic.  If there's just one, it's best to use that as the "encore" at the very end of the playlist.  Going back to a previous point, studio songs sound weird coming out of a live track because there's no audience now, and the acoustics are different.  Up to about three live tracks can work near the end or possibly in the middle (believe it or not), but if you've got more than three on your playlist, it might be best to substitute studio recordings and build a live playlist.
So that's my personal philosophy about how to approach crafting a playlist.  I sometimes deviate from my own guidelines, but that's natural.  Here are the playlists currently posted on this blog.  As with all my other posts, I invite feedback.  Let me know what obvious songs I omitted, why Track 14 should have come sooner and what alternate version I should have used instead!