How to Choose the Best Keywords

First, think about the theme of your site and write down the words you would use your self when searching for a similar site.  Now if the sites you expected came up then you have got a good list of keywords ready to build your site content around.
Do not make your content TOO keyword heavy though as this will result in a penalty from the search engines, there are lots of free tools available for you to check your keyword density and they will tell you what state your site is in regards the keyword situation.
Another good tip is to check your competitors who are getting good search results, view the source code on their page and make a note of their keywords, now have a look through that pages content to see what kind of keyword ratio they have.  Do not copy a competitors keyword and content per se, but use it to your advantage. A lot of websites tend to take their foot off the gas once they have a good search engine position. You need to put time into this constantly to stay ahead of the game.
Use Googles webmaster tools they are there to help you. Make sure your meta tags are correct, poor meta tags can affect you more than you think. Once you have good keyword density then you need to start building up traffic.