The latest Carnival topic from JMTC got me thinking about the idea of whether it's better to specialize or diversify as a new Auction House player. Obviously folks who've been playing the markets for a while have already made their choice on this question, so its the newcomers who generally face this issue. Given my background in tech support, I tend to follow the KISS philosophy when introducing new ideas to people. It's easy for players to get overwhelmed in a game as complex as WoW, so why not start in a small pond and work your way up? This is why I would advocate specializing for the budding auction house dabbler.
Playing the Auction House can be especially overwhelming as a crafter (yes I'm going to focus on the crafting angle) if you're new to the idea of selling your wares. Let's assume you recently picked up a tradeskill, maybe you're leveling this character at the same time. "Classic" items are a decent market in Cataclysm thanks to worgens and goblins, so don't assume you have to level with items to vendor or disenchant. The key to selling with success is to keep an eye out for items with good stats.
I've been following this gameplan since before Cataclysm launched. To this day I'm still making and selling leveling gear. And as a player who's also been leveling an alt I can vouch for the value of well itemized gear. I make a point to research the best gear for my mage and buy or craft it. She's so dang squishy I want every advantage I can get to level her up. So don't assume that other players won't pay good money for a nice piece of gear.
The main thing to keep in mind is that you probably shouldn't compete with heirloom slots. This is primarily the weapon, chest and shoulder slots. Cataclysm has brought two new heirloom types with cloaks and soon helms, but these are more expensive and less prevalent for that reason. You certainly can make items that compete with heirlooms, just don't be surprised if they take a bit longer to sell.
As for the item selection process, I generally go with rare recipes that I have (or can easily get) the mats to make. On a typical server there are plenty of players who will pay 200-300 for a nice blue item rather than farming the mats themselves. If you're still leveling a character through these older zones anyway, often you can collect the ingredients with minimal effort. When looking for recipes to level up your skill, consider making nicer items with sales appeal.
To start out I would identify good quality items from your recipe book, maybe just two or three things. Check the Auction House and see if anyone is selling these same items. If you want, you can watch for a few days in a row to make sure there's no competition. It's possible that one day the auction can be flooded with items that a player crafted to level up, which then disappear after that supply is gone. It's unusual for these floods to include rare/blue items, but not impossible (Jewelcrafters are often guilty of this).
An alternative to Auction House watching is to look up the items you're considering on The Undermine Journal. This site scans the Auction House multiple times a day and keeps a database of all the posting activity for each type of auction house (Alliance/Horde/Neutral). You can use their data to see if the items you want to sell are already being sold by others. This site can also give you a bit of history on the items -- about two weeks' worth of sales. If you search for your target items and don't see regular sales activity for it, you should be good to go!
Once you've identified the items you want to try selling, go ahead and make a few. I would make just one or two of each item so you don't end up with inventory problems. It's easier to stockpile mats than to try to offload a bunch of dud pieces that aren't selling despite your best research. If your items are rares, don't be surprised if they don't sell on the first try. It may take a few days for your buyer to show up. You can maximize your chances by focusing on weekends as your key selling window. Friday and Saturday are big selling days for leveling gear because more players will be working on their alts on those days.
For those of you who don't know where to start with identifying quality items to make, I have some pre-Cataclysm posts that can get you started. I profiled each profession and listed the strongest items from that profession. You can read these posts by following the links below and I've included a brief mention of my personal favorites from each profession:
Alchemy (Mercurial Stone)
Blacksmithing (Truesilver Gauntlets, Steel Plate Helm)
Enchanting (Weapon: Agility, Weapon: Crusader)
Engineering (High Powered Flashlight, Lifelike Mechanical Toad)
Inscription (Minor "research" glyphs, Darkmoon card decks, offhand books)
Jewelcrafting (Ruby Crown of Restoration, Gem Studded Band)
Leatherworking (Helm of Fire, Gauntlets of the Sea, Warbear Woolies)
Tailoring (Spidersilk Boots, Spidersilk Drape)