Good call on this James, it's a pretty important part of bouldering, but if the majority of your bouldering experience has been indoors it's quite easy to become complacent; what with the 1 foot deep mats everywhere, and no rocks to smack your head on :S
Thoughts I'd offer a couple of rules of thumb in case anyone's a little rusty:
first thing is that if you're aware of what someone's doing, and paying attention to the shag then spotting them correctly will be much easier, for example; if they're on a move where they could barn door of at a funny angle and you're standing right behind them not paying attention then you'll be pretty hard pushed to jump a couple of metres to your right of left and spot them effectively, also watching people shag is one of the best ways to learn technique, so it's helpful in that sense as well. - Even if you're not meant to be spotting someone, and you see them scrabbling around at the top of a boulder, or getting shaky legs walk over and shout that you've got them, it makes quite a difference to know that there's someone below you who has your back.
Outside this changes a little, as you've got more to be aware of, e.g. if you're aware that there's a rocky patch of ground to the right of the landing spot if someone lands and stumbles that way, or crumples over to the right you'll be more prepared to stop their head/shoulders from going that way.
secondly (although this may seem obvious) it's easy to forget which are the main priorities when spotting, and how to deal with this, pretty similar to any sport really,
#1 Head
#2 Back/Spine
#3 General Limbs etc
If someone falls from low - and falls backwards towards you, rather than down then you're hands should be absorbing the shock via their shoulders/upper back, however if they fall from high, and are falling straight down, and you spot them here then you'll basically bounce them of your hands so their face smashes into the wall, which is less than ideal, so clamping their lower waist, or spotting their arse is a good bet. If someone's taking a big fall forget about their personal space, there's other stuff to worry about: Jay Kay and his 3-metre-over-head-of-spotter-churnet-fall technique can attest to how essential this is
Also if you ever want to
really direct the way their fall one of the best bets is to grab a handful of their clothing, and yank them in whichever direction is appropriate. - Under the arms is a good middle ground if you're not sure. - This is a good bet if you're somewhere with a steep landing, or a lake behind you (rubicon).
Third and last, if you're standing around with your arms crossed then you're definately doing something very wrong, James B came up with the best rule of thumb over the weekend - if you can't see your thumbs and the climber then you're not kosher.
A spotter is basically there to absorb force/make sure your climber doesn't end up going in the wrong direction if/when the fall (or even drop down from the top of a problem), just taking a bit of the force out of a fall by putting a hand either side of their waist really reduces any strain on the legs, knees or ankles.
I realise this all seems a bit OTT and anal, but the fact is that bouldering is centred around the idea that you're trying moves hard enough to warrant a fair few falls, it just makes sense to do things properly, also you're always going to feel more comfortable trying something hard/a little dangerous if you hear an 'I've got you mate' from someone you trust below you.