Anupendra recently forward me the link to Paul Graham's article on generating ideas for startups. Amongst the best I have read for generating ideas.
Also check out this book - it gives some basic principles for generating ideas. They include:
1. The single biggest determining factor in whether you would generate a good idea, is a belief in your ability to generate ideas. You do not need to be a pony tailed artist to generate ideas.
2. Initiate idea generation with an idea; any idea for that matter. That will get your creative juices flowing and get ideas out
3. Not acting on a good idea is equivalent to never having generated that idea at all
4. To get ideas about a topic, you need to have insider knowledge on it. Expand your knowledge. Expand your horizons
5. Forget rules. Be illogical. Be silly. Ask Ask Ask.
6. When you have problems generating ideas on a topic, switch and start working on something else
7. Have Fun
P.S. If you are now inspired to generate ideas, and end up launching a startup with that idea, a 1% share in the startup would be adequate compensation for my contribution :)