Take the time to have clear idea of what scale and scope of renovation you want and what financial resources you can direct toward the project. There is no sense to lie to yourself or a contractor about what you can afford.
Take photos of homes you admire, cut pictures of out magazines, and assemble other images which will help describe the type of results you hope see when your project is complete.
Drive around your area looking for homes that you like. When you find a house you like, contact the owner (while it may seem a bit forward, if you couch the request like "I really love what you have done with your home. I'm considering a similar renovation on my home and wondered if you'd be willing to share with me the name of your contractor"...people love to hear that others admire their taste or their home).
Once you have a list of contractors whose work you like, be sure to contact 3-5 different contractors. Let each know that you have heard good things about them and you hoped they could come to your house for a brief look at a potential project
Outline for them your goals for the project, your budget, and show them the photo/image collection I mentioned in Step 2. A picture is worth a thousand words. Ask the contractor if this type of project would be interesting and appealing to him/her. If they don't show immediate interest - move on.
Ask the contractor "what makes a great client" for them. Now LISTEN to what they say. If they are describing someone like you -- you may have a good fit.
Get references from the contractors you are seriously considering -- especially from projects they have completed in the last year. Call each reference and go see the results: It's one thing to have someone say they loved their contractor on the phone, it is much more valuable to stand in their house and get a feel for the "finished product"
If you have narrowed it down to 2-3 candidates, ask yourself with whom you would most enjoy having dinner. A renovation takes weeks/months of your time and the contractor will be in your home almost everyday so good communication and a good "fit" is key. Trust your instincts and wait for the right fit.
Once you hire to contractor, treat them and their team as professionals. You can set the tone for the realtionship on the very first day by buying the crew pizza. If you treat them with respect they will likely return the favor....and your house will start to become a real home. And isn't that what you hope to build anyway?!