I'm not fond of random background generation where you have no choice of what to keep or not. I do think rolling random background traits to get ideas from can be very useful though. It's like coming up with names for a character, a good friend of mine has a huge scrabble di that has letters all over it. She rolls it for a starting letter, but if that starting letter still doesn't approve, rolls it again. I think the random factor is much more appropriate as an idea generator than anything that has to be set in stone in character background.
Equally important, in my mind, is the use and misuse of cliche. Several years back I put together a LARP event and those participating, mostly males between the ages of 16 and 25, were asked to fill out a character questionairre so the storyline of the LARP could be personalized to their backgrounds. NEVER have I seen so many characters that were orphaned, raised by some kind of animal, and care for nothing but gold and willing women. Mind you, I'm not really sure some of these folks had any idea what to do with a willing woman, but they were sure their characters did. I was also rather concerned about the local animal population if they thought taking a loud, helpless human infant into their pack, pride, gaggle, whatever, was a good idea. No wonder so many of these animal families got slaughtered, leaving the characters angry and antisocial.
For RPGs my general rule is to come up with a personality, work that with the stats and then bring in one or two good hooks which can either be used just by the GM as a plot device, or something to come up in the line of play. One of the more amusing characters I've seen in a recent RPG is an assasin for hire - not so rare, but the reason she kills people for money....paying college tuition at Cornell university, talk about an interesting summer job.
~J