Also, I never change the colors associated with someone. So a lot of people are locked into a color scheme associated with a style they haven't used in years. And if you make a new journal, I'll give it exactly the same color scheme as your old one, even if your new one has a new style.
After awhile, I decided that I needed more variation. I had a lot of colors used up, and too many people were similar shades of blue. So I still try to pick the foreground color based on the same criteria (a prominent color in your current style, though I'll vary it if necessary to make you unique), but the background colors are different. Sometimes I'll go for a certain theme or grouping, and sometimes I'll just pick a color heretofore underutilized on my Friends page.
Almost every community and synfeed on my Friends page is represented by a white background and a black foreground. One exception is for the handful of (now dead) ujournal feeds that a group of my Penn friends used--those were a unique foreground on a white background. The other exception is Abuse, which I'll get to later.
Not every white-background journal is a synfeed or comm, though. Some are just people whose original style was predominantly white. Also, most of those former ujournal users who are now on LJ have the same color-on-white scheme that I gave them for their ujournal feeds.
One theme I've tried, with varying success, is a light blue background for many of my high-school and college friends who are my year. (Essentially, people who I mentially associate as being friends with bumonyou, even though that's not an entirely accurate delimiter.) Most of those people have a light blue background, and most of the people with a light blue background are those people.
Another theme I use is red for Abuse. Red was very underutilized in my color scheme when I joined LJ Abuse, so now two shades of red are reserved for Abuse communities (with the usual black foreground), and two others are reserved for people I met through Abuse (with the usual unique or style-based foreground).
There are at least three people on my Friends list who post regularly and who have their own background color associated with them: jox, dishpanwaterr, and (to a slightly lesser extent) gutwoman. I have a very strong mental association between those people and their colors. I didn't necessarily mean to give them their own colors, but now there's no way I could make them share. It would be too confusing.
Also, it's happened to work out that everyone who is a shade of green is a very good writer who I enjoy reading a lot. (To be sure, there are plenty of good writers who aren't green. It's just that there are no green bad writers. "Green" is a proper subset of "good writer", if you will.) Again, this wasn't deliberate, but now that I've noticed it, I could never make someone green without first knowing if they're a good writer.
I am teal. No one else is teal. (In fact, I'm navy on teal, which will come as no surprise to anyone who's ever seen any web page I've ever designed.)
How do you assign colors to your LJ friends?