I think whenever anyone mentions home automation, automated lighting usually comes to mind right away. I definitely wanted the ability to have lights come on and off at pre-determined times, or follow some other logic along with some other things. However, there are many, many solutions for automated lighting, all with different advantages and disadvantages.
The first thing you need to do is choose an automated lighting protocol and control system. These include things like UPB, Z-Wave, Zigbee, Crestron etc... I'd suggest reading up on all of these on someplace like CocoonTech. Some of these may need to be wired specially and so need to be installed on the construction phase of your home, but many are merely replacement light switches that can operate over your home's existing wiring, wirelessly, or with a combination of both. You'll also need a control system to control the lights and I think this is an important consideration when choosing your lighting protocol.
For my system, I chose Insteon. Insteon devices communicate over the powerlines as well as wirelessly, so it is installed with conventional home wiring and did not have to be wired especially for this. This has the advantage of not only being able to be installed in an existing home, but being removeable in the event you wish to sell your home and not the automation setup. Furthermore, a retrofit solution like this doesn't have to be installed all at once. Switches can be replaced one at a time, or in small batches. This is a good way to go as it allows you to not only soften the blow on your budget, but also start with devices you know you want to automate, and then add automation as you desire, rather than just paying up to automate everything and finding later some things did not require automation. (Although who are we kidding - I'm probably going to want to automate everything anyway).
One additional installation wrinkle is the automation of 3-way circuits (2 switches controlling one load). Here is a pretty good diagram of a 3-way circuit. An Insteon switch is less of a mechanical switch and more like a little computer. It must be connected to a neutral and hot wire at all times. You can see that if you just wired them in to a conventional 3-way circuit, then shutting off the first switch will not only shut off the power to the light, but also the power to the Insteon switch in position 2. In this case, that Insteon switch will now not be able to control the light at all. Now, this is not a big deal, in that all you really have to do is reconfigure the wires in the box such that one Insteon switch controls the load like a 2-way switch, and the other switch is merely powered, but physically controls no load. These two switches are then 'linked' via software, and the behavior is just like that of a traditional 3-way circuit. This is the diagram that Smarthome gives on their web page. I reccommend getting an electrictian to do this for you.
The main reasons I chose Insteon were that it was relatively inexpensive, and I found a software package to control it that I really liked. There are definitely better solutions, such an integrated automation system like Crestron or RTI. These systems are known to be of very high quality and very reliable, however they are also very expensive and if changes to the systems behavior are desired at a later date, you have to open your wallet and have a tech come out to make the changes as they are generally not user-maintainable. This was a big block for me because I figured I'd want to be tweaking the system all the time.
I also liked the fact that since you are really just replacing all of your existing switches with automatic ones, your home will function normally in the abscence of no fancy control schemes or macros. In other words, when my mom comes to visit, she might not be able to know how the system works or how to activate advanced lighting scenes or anything, but when she presses the switch, the lights will turn on. Insteon also can control lamps or other plug-in devices very simply with a simple plug-in module that goes between the lamp and the outlet and offers all of the ability to turn the lamp on off or dim.
Although Insteon was very affordable, this can come at a price as well. Insteon switches have been criticized for their quality/reliablility as well as the look of the switches. I, for one, don't mind the look of the switches at all as they largely resemble the paddle-style switches in most homes, but with a small strip of LEDs along one side. There are also 6 and 8-button keypads available and I think they look alright as well. As for build quality, I admit they do have a bit of a cheap, clicky feel, but frankly it's better than the crappy $4 light switches my builder installed in the first place. On the reliability front, my understanding is that the Smarthome (the manufacturer of the Insteon switches I'm using) had huge reliability issues with regular switch failures needing replacement. To their credit, they also had a reputation of readily replacing failed devices. There was also a sense that these failures were decreasing significantly as Smarthome began to fix their reliability problems. I decided to gamble on Insteon, and in the couple of years that I've been running the switches (well over 50 devices) I just recently had my first failure. (This doesn't include Thermostats. I'll cover these in a later post.) Realistically, these things should never fail, but at the price compared to other technologies, I'm willing to accept that failure rate.
The other kind of reliability to consider is the signal reliabilty or response rate. For the most part, Insteon is pretty good. It acts as a bit a mesh network, with each device acting as a signal repeater, so as you add devices, the reliability increases. For the most part, responses are almost instant, but sometimes (rarely) there is a measurable lag between hitting a button and seeing the response. Also, executing many lighting commands from the software, they are sent sequentially and so not all lights turn on/off at the exact same time (although in some situations they can be set to). When I execute the "All lights off" command in my home, it can take between 5-10 seconds before every single light has been shut off. And in very rare occasions, a device may not get the signal at all (although that truly is quite rare for me). Nonetheless, this lighting fits my needs 99% of the time and improving on that measure would require a substantially higher invesment in a more expensive lighting protocol which is not worth it in my opinion. (Plus, I'd have to find another control system other than Indigo, which only controls Insteon, and with the latest update, Z-Wave).
At this stage, I'm very happy with the lighting system. It is controllable remotely (via Indigo) it can be set to have lights come on and off at certain times, or at sunset/sunrise. It can run a vacation schedule when we're out of town to make the house look occupied. I can shut all lights off with one command when leaving the house or going to bed. I can link one switch to the load on another switch (i.e. living room lights and lamps all behave as one).
I'll cover the control software in greater detail in another post.