Although the sims dont care what a house looks like, or even if there is a roof, if you want to make a really great house, you should take realism into consideration.
Whenever you build a house, think to yourself "Would I like to live here"
Imagine walking through the rooms... what would you think of them if you were someone looking for a house to buy.

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Layout:
Make sure sims have easy and efficient routes to get from one area of a house to another. You may wish to consider using hallways. For example, a person should not have to walk through a bedroom or bathroom in order to move between common areas such as the kitchen and loungeroom.

Cover:
Although there is currently no rain in the sims, there is in real life.
If you are going to have outdoor eating or relaxation areas, you should make sure they are undercover.
Also, you should not force the sims to have to travel outside in order to get from one place of a house to another, unless it is to a completely seperate structure such as a guesthouse.

Structural Support:
Try not to build a house that looks like it would just fall over in real-life. This could mean you may have to add poles beneath decks, and pylons underneath rooms that stick out on the second story.

Privacy:
Building a bathroom at ground level with large windows is a great example of house that has not taken privacy into consideration. Bathrooms should either use the high-up windows, or be built somewhere where people cannot see into the windows, such as behind a hedge, or on the second story. Bedrooms should also have a degree of privacy, either from window placement, or by using curtains. Bathrooms and bedrooms should of course use doors, and not archways.

Style Consistancy:
When you build a house, try and stick with a consistant style, especially for the exterior.
The living rooms and kitchens should usually reflect the style of the outside of the house if possible, but this is not necessary. Most people decorate their bedrooms according to their own tastes, not the style of the house, so feel free to get a bit more imaginitive with them. Just make sure that each room uses only one particular style. Trying to decorate a single room with more than one style will usually not look good.

Decorating Customs:
Depending on where you live, you will find that most of the houses in your country share some common themes that you should try and adhere to. An oriental house is of course going to be decorated differently and use different colour schemes to a modern house.
Decide on the the look that you want your house to have before you begin.

Functionality:
Bathrooms and kitchens should not use carpet, preferably tile for bathrooms and some sort of easily cleanable flooring for kitchens. Tv's should be placed so that are not too far away from the people watching them. A pool should not be surrounded by high walls, as in real life it would pose a drowning danger. Bathrooms should feature a sink and mirror. Doors should open so that the door does not obstruct entrance to the room. These are all things that make no difference to gameplay, but all make a house seem more realistic.

Relaxation:
Almost all real-life houses have some sort of lounge, tv or living room... people need somewhere in the house that they can get together in a relaxed, informal atmosphere.

Noise:
This is a fairly minor issue, however most people would prefer that bedrooms are placed as far away as possible from roads, loungerooms, kitchens, and other potentially noisy areas.

Lighting:
Sims are quite happy to live in a house with no windows or lights... but people are not. Make sure each room has enough lights, and that areas like desks, mirrors, and places where people read are especially well-lit. You should try and ensure that rooms are lit by windows during the day, or the rooms will feel oppressive. Because of lighting, putting a window behind a TV will usually make the TV harder to see in real life, so take this into account too.