Beginning Character Levels (DMG)

If at all possible, start characters at 1st level. The lowest character levels are like the early years of childhood. What happens to a character during these first adventures will do much to determine how that character will be role-played. Did Rath the Dwarf save the day by fool-hardily charging into battle when he was a mere 1st level? If he did, the odds are good the player will try it again and will begin to play Rath as a bold and reckless fellow.
On the other hand, if Rath was clobbered the first few times he rushed in, the player would begin to play Rath as a cautious, prudent fellow. Even the smallest events can have a great effect on low-level characters, so these events sharply etch the behavior of the character. Deny the player these beginning levels and you are stripping him of the opportunity to develop his character's personality.
==Mixing New and Old Characters==
Letting players start at the beginning is fine when you first open a campaign, and all player characters can begin at the same level. As sessions are played, however, a disparity in character levels will develop. New players will join the game and old players will create new characters. Eventually, you'll reach a point where the original group of players has characters many levels higher than when they began. How, then, do you introduce new players and new player characters into your game?
There are times when you should allow a character to start above 1st level. A newly-created character should begin a campaign no higher than 4th level unless the group is very powerful. If this is the case, he should begin no higher than the lowest level character in the party (and it may be better to start a level or two lower).
The new character should have equipment similar to that of his adventuring companions: If they have horses, he should have a horse, too. But do not give him free magical items. These he must earn. He should start with a small amount of cash.
Sometimes a player can replace a fallen character by promoting an NPC henchman to player character status. This is a good method because the player is already familiar with the NPC and may have created a personality for him. When this happens, the player is given the NPC character sheet and allowed to take full control of it.
==Pre-Rolled Characters==
It is useful to have a few pre-rolled characters on hand. These should be of several different levels and classes, with equipment and personality quirks noted. These "instant" player characters can be used by guest players (those only able to play in a few sessions) and by regular players whose characters have died during the course of a session.
When the latter occurs, introduce the new character at an appropriate point and then allow the player to control it for the rest of the evening. This keeps that player from being bored. If the player enjoys the character (and you are pleased with the arrangement), you can allow him to continue playing that character in future sessions.