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Bike Fit 101

A few old school Bike Fit rules of thumb
There have been a number of “rules of thumb” to proper bike fit. “A fistful of seat post” meant if the frame was the right size the proper seat height would reveal only a fistful of the seatpost. Another was to straddle the top tube and raise the front wheel. If there is more than an inch of clearance between the tire and the ground the bike is the right size. Alternatively, straddle the seatpost and there should be about 2 fingers clearance between it and your crotch. There are more but it just goes to show you there are a number of theories on proper bike fit. Do some research, ride some bikes and find what works for you.
Important initial note
There are people who have gone to class to learn how to do this professionally. There are entire books written about this subject. There are even specialized tools and machinery to help get your bike set up perfectly. What follows is a basic guide that does not replace getting a professional bike fitting done. I strongly recommend going to your local bike shop and having a pro do this (in Urbana-Champaign I recommend going to Champaign Cycle). Also, everyone's body is different so the formulas are just a guideline. So, use all of this as a starting point...
Tools needed
Tape measure -- one with both metric and standard units is nice but not necessary
Level -- a short bubble level (12" or so) will work just fine
Allen and/or socket wenches -- this will depend on your bike
Plumb bob -- fancy talk for a piece of string (approx 36") with a washer or other weight tied to one end
Square - this can be a proper square or a large book
Misc -- A friend to help you with measuring, holding,etc, paper/pen to keep track of numbers, and a calculator
... also, if you want to get fancy, get a Goniometer to measure your knee, arm and back angles.
A good starting point is to know your inseam...
With your cycling shorts on, stand barefoot (or in thin socks), with your back against the wall, and your feet about six inches apart. Put a large, hardcover book between your legs and pull it up into your crotch (approximating what the saddle does). Make sure the book is square against the wall and measure the distance from the floor to the top of the book. For bike measurement purposes, this is your inseam.
... and get your cleats postitioned correctly
This is different on everyone but the basic idea is to get the ball of your foot positioned over the spindle of the pedal. You also want your foot postition (side to side) to feel as natural as possible. Getting this wrong can cause serious foot and knee pain -- and damage. Many hardcore tourists (and now even some racers) are suggesting putting the cleat as far back on your shoe as possible. This is said to reduce the hot foot sesation that comes with long rides. All I can say is, try different positions and use what feels best for you. (Note: Many people will argue that for touring you are better off with a good stiff shoe and no cleats... read about it on the web, try it out, and do what's best for your riding style)
Frame size
Inseam x .65 (this gives you a good center of the bottom bracket to the center of the top tube measurement)
[Note: With the new compact sizing,and sloped top tubes, and all that, this system has changed a bit. Your best bet here is to buy a bike from your local bike shop and have them size it properly for you or to do a lot of reading up on sizing on the internet -- links below.]
Saddle level
This would be a good time to check the level of your saddle. Generally speaking, you want your saddle to be level. If it tilts forward you'll slide off of it (and put undue strain on your shoulders because they will need to hold you up). If it tilts backwards you'll cause discomfort in your groin. Brooks saddles have a bit of a raise in the back so you want the front part level. Try riding no handed -- if you find yourself sliding forward, your saddle is pointing down; if you have too much pressure on butt bones, your saddle may be leaning backwards. In any case, check it with a level.
Saddle height
A good starting point is to use this formula: Inseam x .883 = Saddle height (as measured from the center of the bottom bracket to the top of the saddle following the seat tube). If you have a goniometer, your knee angle should be between 27 and 37 degrees when you leg is at the bottom of the stroke. Another good rule of thumb is: when the crankarms are horizontal, the top tube should be right between your knees when you squeeze them together.
Saddle fore/aft position
Put your bike on rollers or a trainer, make sure it's level, and ride for five to ten minutes (this will get you situated comfortably on your saddle). With your feet still on the pedals, and your crank arms in the horizontal position (parallel to the floor), drop the weighted string from behind your knee-cap to your pedal -- it should bisect to pedal spindle. Move the saddle forward or backwards until this position is attained. Long distance riders may want their saddle back up to 2.5 cm.
[Note: Because of the angle of the seat tube, if you raise or lower your saddle you will also be moving the saddle towards the front or back. Set your saddle height first, then the forward aft positioning.]
Stem length
A reasonable rule of thumb here is when you are in the drops and looking at your front hub the view should be obstructed by your handlebars. Also, when riding on the hoods your back and arms should be at roughly a 90 degree angle from each other. Of course, there are numerous measurements you can take to figure this out scientifically but that is a good starting point.
Handlebar size
There is a general consensus that your handlebars should be as wide (measured from center to center) as your shoulders (between the joints) for maximum leverage.
Handlebar height
Recommendations on bar height vary wildly -- racers prefer their handlebars lower than their saddles (for aerodynamic reasons); tourists prefer their handlebars at the same level or slightly higher than their saddle (for back pain reasons). You're on your own to figure out your optimum height but for a 4000 miles cross country tour I would be more concerned about comfort than "coolness factor". So, I would go on the high side. Generally speaking, raise your bars!
[Warning: if you have an old school quill-type stem be sure to leave enough of it in the headtube so that it doesn't pop out or break. There will be a mark indicating that height.]
Other Bike Fit tweaks
Brake lever placement -- Brake lever tips should be in line with the bottom of the handlebar drops.
Handlebar angle -- Handlebar drops will generally point to the middle of the seat stay. The goal is to have your hands and wrist in a natural and comfortable position while in the drops.
NOTE: Remember, changing any one of these will affect all of the others. If you are going to change something you'll need to start at the top and do all of it all over again. It's worth it! Also, if you have been riding your bike for a while with the setup you've got make any changes gradually -- sudden changes are not good and can cause injury.
NOTE #2: The only way to know if your bike is set up correctly is to ride it... a lot. If your knee hurts a little bit after riding 30 miles it will hurt a lot after riding 4000 miles (if you make it). Get you bike adjusted and tried out well before you set off across the country.
Packing your bike
Before you pack your bike make sure to measure and record the position of your seat, handlebars, etc. This way you can put it back exactly the way it was during training.
Quick Tip:  Knee Rx.  Here's a simple remedy that's been known to quickly solve a developing knee problem: If the pain is in the front of the knee, raise the saddle. If it's behind the knee, lower the saddle. Don't go overboard. Just 2-3 millimeters can be enough to restore pain-free pedaling. (from

Competitive Cyclist Fit Calculator
Using 8 core pieces of information this on-line caculator will calculate your optimum frame size and initial position. You'll need the assistance of another person to make the most accurate measurements possible... (link)

A few other good Bike Fit links:
Colorado Cyclist
Cycle Metrics
Jim Langley
John Neugent
Peter White
Rivendell Bikes
Steve Hogg
Sheldon Brown
Spokesman Bicycle (watch the videos)
Bike Fit (by Arnie Baker -- available as a pdf for $19.95)
[Note: There are many different schools of thought on proper bike fit. I would recommend reading as much as possible from as many different sources and then figure out what works best for you and your style of riding. For even more infomation check out this page.]
... and a few pages on cleat positioning:
Jim Langley "Basic Bicycle-Shoe Cleat Positioning"
The Care Exchange
... and a few Gear Ratio links:
Ken Kiffer (Cycling Cadence and Bicycle Gears)
Sheldon Brown
... and a few other useful links:
Read "Ouch, My Knee! Is There a Bike Fitter in the House?" from the NYT

Here's a YouTube video on seat adjustment -- there are plenty more if you search for them:

Miscellaneous Stuff
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Champaign County Maps
Miscellaneous Stuff

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Please be safe, follow the rules and have a good ride!