I think this is the first thing that should be done. I booked my venue over a year in advance (February 2010). Venues, especially popular ones, can book that early. Make this your first priority. Plus, it sets the tone for the entire wedding!
Suggestions
-Choose a location that adds to the essence you are going for! Modern? Try an art gallery. Vintage? Try a historic site. But do your research! I chose a historic site but there are also many limitations with that such as certain fire restrictions, liability policies, vendor restrictions, etc. Think about what the venue can do for you. I chose a historic site with a garden -- instant way to lower flower costs if you want.
-Ask the right questions before booking. Don't want any other weddings going on at the same time? Be careful about booking a wedding at a large hotel (think Bride Wars at the Plaza!).
-Is the venue all-inclusive? This can save a lot of money! I had to rent tables, chairs, silverware, and linens but that is one thing a venue like a hotel can be very good for.
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