There are 4 shapes or cuts to diamonds - round, marquis, emerald, and pear. The best, most desirable and ideal cut is round. The level of clarity of the stone is extremely important in determining it's value and quality. You will want to purchase as close to a perfect stone as you can possibly can find within your price range. The color of the diamond also determines it's value and quality.
Color is designated by a letter grade.
This is a nearly colorless or blue-white stone. The letter grade designations go from there all the way to the letter Z, which would be a very dark stone. When purchasing a diamond, you want to come as close to the color grade D as you can possibly afford. This will give you the highest possible quality of stone. Obviously, your budget will influence how closely you are able to do this.