There are a few things to watch out for when looking for a web host. Follow these simple guide lines, and things should be fine.

1. Know the lingo.
When you first venture into the murky water that is web hosting, you will be immediately be inundated with terms such as web space, transfer, CGI-BIN, Unix/Windows, Apache, IIS, PHP, MySQL, etc. KNOW what they mean so that you don't fall prey to offerings which really don't exist. Do your research here!

2. Avoid unlimited/unmetered web space/bandwidth/transfer like the PLAGUE
As the old adage goes ... if it seems too god to be true, it often is. Lets look at it logically. Unlimited hosts basically offer all you can eat. Take as much as you want - you only have to pay a set price.
Seems perfect? Hardly. Such hosts count on you using little bandwidth and space - start using too much, and they will cancel your account.
And how do they do this? In their killer terms of service.
Usually hidden and mostly not paid attention to, the terms of service outlines what you can do or not do n their server. In order to keep their very false promises, such unscrupulous hosts usually do not allow any downloads, and CGI programs, allow 'unlimited' only to a certain value (which of course goes against the entire principal), and suspend your account for excessive use (in which they hold the right to claim what is excessive and what is not).

3. Your own Gut
Checking out the website is very important. If you have troubles navigating the website, if it is very slow, if you just don't have a good feeling -- what makes you think you will be happy with their service if you do sing up? Web hosting is a satisfaction thing.

4. DO THE RESEARCH
The internet is a hug repository of information. If a host is bad, it likely has angry customers that want their voice heard!
There are lot of places to check. First of, check web hosting directories . Do a search on the specific host. If the host isn't listed, it isn't all bad - they could be just new and not built a reputation. Alternatively, if they are listed don't have any reviews, that could not be bad either - the reputation factor comes in. Do understand that angry people are morel likely to voice their displeasure than content ones will voice their pleasure.
Next, check out webhostingtalk.com Do a search on your host, and post asking for opinions. Many small and mid-sized hosting companies frequent that place, and maybe even the owner of the host you are inquiring about can be found there! Be careful though. ... it can become a jungle and solicitations might come flying. The forum and its search function is one if THE richest resource on web hosting.
Lastly, hit ht newsgroups. Using groups.google.com, do a search on the host you are looking for.
Remember one thing ... due to the intense competition, some hosts do post negative things about other hosts. Remember to carefully read what is written.

5. Contact them!
The final test - there is no better text in service than by actually contacting them. Find their contact info, and shoot them an email with some questions. If you cant find their contact information easily, run FAR AWAY from them. Such hosts can be trouble if you need urgent assistance and you can't even get a hold of them
Judge the host by the timeliness and manner in which they reply. If they are rude to you now, or don't know what they are talking about, what makes you think they will be kind to you if you sing up? Also, taking more than 24 hours to purely can be a bad sign, and more than 48 hours is UNACCEPTABLE.

There you have it. The lowdown on the business. Follow these steps, and you should have no problem finding a good host.