There are a lot of game characters around. I don't know if you've noticed. Truth be told, I haven't really - most of them just aren't that interesting.
Take the protagonists of vying rivals Prototype and inFamous. They both wore jumpers (hoodie vs. windcheater), jeans and sneakers. Alex Mercer may have had a shaved head, but probably not. He looked like a Hunter from Left 4 Dead. Cole's most memorable feature was the fact that his jacket was yellow. Faith, from Mirror's Edge. Cool tattoo, but do we ever see it in-game?
Differentiating again, I'm going to sound like a huge Japan-ophile. But this is another area where Japanese games get it right. Their characters are visually interesting.
I'm not talking Final Fantasy interesting, with Vanille's random fur-and-bone attachments. I'm talking simple, yet evocative. I'm talking about characters whose personality comes across in what they wear, and yet allows room for surprises. I'm talking about DS games.
Neku in The World Ends With You is an excellent example. Just a normal guy with spiky red hair, and massive headphones. Shiki is likewise memorable - cute outfit, ridiculous, but adorable, hat. Josh is memorable for his lack of ornamentation. Each character comes across as an individual, with individual tastes, and these tastes reflect their personalities.
Professor Layton and Luke sure look like who they are, don't they? Phoenix Wright, Miles Edgeworth, Mia and Gumshoe are all immediately evocative. When I say evocative, I mean evoking an emotion - they make you feel a certain way about them before they've even spoken. That's a big plus, in my opinion. Just like in a movie, your first glimpse of a character should tell you enough to understand them. Otherwise, what's the point?
Then again, localisation can kill this, too. The voice of the final character you meet in Professor Layton 2 was so bad I had to turn the sound off. I can only play Odin Sphere in Japanese. And I wish, how I wish, Final Fantasy XIII had made the choice to offer the alternate Japanese voice track to PS3 players, rather than omitting the option from both consoles! There are very few games that I've seen localised well enough to outdo the original. I know there are many challenges, especially with fitting longer English words to Japanese mouth movements, but in games where that isn't an issue, there's really no call for either poorly-written dialogue or terrible voice actor choices.
People complain about Japan's obsession with androgyny. I complain about our obsession with masculinity. A man has to have a manly voice, or he's not a man! Especially if he looks effeminate! But some of the dialogue uttered by these translated characters simply doesn't cut it when voiced by the equivalent of Vin Diesel. If you're going to translate something, you need an understanding of the culture it came from, or is going to, in order to make the translation work. It's just common courtesy.
But this post was about characters. Where the player can customise and change clothes and decide on their party members' hair cuts or hats, it becomes difficult to create a unique-looking character. Morrigan is one. She'd be recognisable in whatever she wore, and I still don't know where she gets eyeshadow in medieval-style Ferelden. Lara Croft is memorable for her massive breasts and tight t-shirt. Mario, in his primary-coloured overalls certainly fits the bill. Even Link is memorable, if only because what he wears is so simple, and he's the only one who wears green.
But to create this kind of personality, the physical artefacts have to be part of the character's outlook. Mario wears overalls because he's a plumber. Link wears what he wears because he's in a pseudo-medieval fantasy. Lara Croft is, well... The less said the better. Morrigan's a witch, so suddenly the dark eyeshadow makes sense (oh, psychological theories of makeup...). Sazh's chocobo-hair doesn't. Vanille's random ornamentation doesn't. Lightning's random side-curl doesn't. Hope is the only one who dresses in a way that suits his personality. I realise I'm picking on a series known for its extravagance in character design, but where better to look than the most obvious?
To draw your character, you have to know your character. Memorable characters are memorable in word, deed and look. You can't have one without the other - they're like the handle, body and clapper of a bell. Lose any one, and you haven't got a chance of making yourself heard.