Particularly where the two parties are from different states, it is important to specify which state's law will apply and where any litigation will be held. Obviously, this type of provision can generate some argument. One way to resolve disputes over it is to state that the party suing has to sue where the defendant is located. However, this is not appropriate for all agreements. Arbitration clauses are something else to keep in mind.
Arbitration is generally cheaper and faster than litigation.
On the other hand, arbitration awards tend to be smaller than jury awards, so one consideration is whether you are more likely to be a plaintiff or defendant. Arbitration is particularly useful in a relatively small industry or where the parties are likely to be doing business again in the future. Mediation is another option that can be used with or without an arbitration clause. The disadvantage is that if the matter does not settle, you still have the cost of arbitration or litigation. Of course, if a contract goes well, you are likely to never need to look at the provisions after it is signed.