This is the topic I've been waiting for...
In my personal opinion, just putting on a costume and not having a little character in it, makes it seem empty and hollow. It's like makeup, but you wear it as clothes. To me, my cosplay is my uniform. When I pull together clothing that resembles a character, I try to bring their spirit along with it. Rather than buying expensive outfits made already by another company, or even just an accessory to the costume, and having to sit and wait for it to come in the mail, I prefer to build the costume piece by piece using parts from real clothes. So most of my cosplays tend to look like clothes pulled together in a certain order.
Ex. Luffy: denim shorts, straw sun hat with red ribbon, red vest, sandals.
But also done based on how they match my own style in some way. Like Inuyasha who is a half breed, or Naruto who takes his knocks but never gives up, or maybe soon, Cloud, who's a calm-headed drifter and can't change a thing about it, no matter what group he splashes into.
I try not to cosplay a character that I don't know a good deal about. It took me a little while to start looking at doing Naruto. If I was in character, then it would be to the extent of the safety rules of the con, or common sense in the public eye if it was an out-of-con meetup.
Ex. I would cosplay Miroku and talk and act like he would, but not do EVERYTHING he would, because it would cross countless comfort boundaries for me and those around me.
I've seen only half of anyone at the conventions, even for a brief time, roleplay the character they're wearing except to pose for pics or bring it out in a skit. Maybe it's just me, but wearing a cosplay that most fans might love, and not putting some soul into it, is like seeing an eye-catching manga cover, then when I go to read it, nothing is printed. I just can't see myself wearing a costume and not giving life to it, otherwise what's the point in wearing it? If I wanted to be normal, I might as well wear normal clothes. If I'm in cosplay, it's an opportunity to represent the character I'm wearing, and express my fandom of them.
So next time you see me in cosplay, know that I'm looking for an opportunity to roleplay the character, but that I'm still me deep within this mask and soul of their impact on me as a fan.