I tend to mix it up. Sometimes I'll base them on characters from movies, sitcoms or books. I usually don't intend them to be exact (which is just as well sometimes :D ) but usually reasonably close. Other times, I'll base them on people I know - again, loosly based. Occasionaly, I'll have an idea for the look of a Sim in my head and I'll run with that.
As for their traits, personablities and hobbies, I sometimes define this myself if I've got a particular character in mind. Lately, I've been having some fun with the Story feature of Create-A-Sim, which is helping me to mix it up a bit :)