1. Oy, Chica, Pa. Though you do want your characters to sound as real as possible, you do not want to rely on stereotypes to get your point across. Your character should be authentic and real-to-life. A person from the rural South would obviously sound different than a Yankee from Boston, and you would want to reflect that; however, you would want to avoid the hackneyed, clichéd terms of a type of person; don't pigeonhole your characters. Now, does this mean your Southern character can't say "fixin'"? That you can't have your Italian character get angry and go off on her mate in her own language? Obviously, the answer to that is no. It really is a fine line. I think a good question to ask yourself is MUST my character say these exact words. If you feel in your gut that there is no other way to state something, then go for what you know.
2. F*ck you, motherf*cker. Now, this comment might get a lot of people talking - well, good. Some say that it is best to avoid using a lot of profanity and slang in stories. Slang dates a work, and profanity may "convey" toughness, anger, but it can also be used as a crutch to avoid supplying great dialogue and action to convey the toughness and anger. Some writers believe that using slang in your dialogue is fine; it illustrates how the characters talk; however, if your narrator is not part of that "slang/profanity" culture, then you should use standard English in your works. Once again, I say understand your character, BE your character. What does he or she HAVE to say in order to get his/her point across and to move the story along? Figure that out and write it.
The important things to remember about writing dialogue are 1) your dialogue should have a point and do more than simply present talking heads and 2) your dialogue should sound real and authentic to your characters and the situations to which they find themselves talking.
Below are some books, articles, and sites that talk more about dialogue...
Writing Great Fiction - Dialogue by Gloria Kempton [link]
"Writing Great Dialogue" by Rob Tobin [link]
Let the Dialogue Speak [link]
The Writer's Writing Guide: Dialogue [link]
Writing Dialogue - from BookEnds, LLC - A Literary Agency [link]
Shon Bacon is an author, editor, and educator, whose biggest joys are writing and helping others develop their craft. She has published both creatively and academically and interviews women writers on her popular blog ChickLitGurrl: high on LATTES & WRITING. You can learn more about Shon's writings at her official website, and you can get information about her editorial services at The World According to ChickLitGurrl.