+1 for Blue Nile. Take your time in their Diamond Education section, and all your questions will be answered. After several months of researching diamonds I felt like I was qualified to be a gemologist! Blue Nile's diamond search and build-your-ring sections are awesome, and I really like that you can see the certificates for all their diamonds. Because they don't have the overhead of a brick-and-mortar store they have reasonable prices for the quality they provide.
Generally, the most important factor is cut (which is different than shape), color is second most important, and clarity is last or close to last. Carat isn't as important as many think, and is actually dependent on the size of the woman's hand. Smaller fingers look great with smaller carat diamonds. Note that four .5 carat diamonds are not the same price as a single 2 carat diamond of equal quality. That's because it's harder to find larger diamonds without color or inclusions. Round and Princess shaped diamonds appear to be larger than other shapes of the same carat weight. Ideally cut round and princess diamonds are also geometrically designed to be the most brilliant. Brilliance can help mask lower color grades, but try to stay at or above I. For clarity, you generally want to be at SI2 or higher. In fact, this is where you can save a lot of money, because to the naked eye there's not any difference between an IF (flawless) and a SI grade.
Different shapes (heart, etc), colors (pink), and flourescence are generally viewed as negative/undesirable/flawed by diamond purists. But then again, by conventional standards I guess I'm viewed as undesirable/flawed. I guess all that truly matters is that you're happy.
Make sure the diamond is certified, preferably by GIA, and have it independently appraised as soon as it arrives. Stay away from mall jewelry stores.
Finally, something you might find interesting is that the "tradition" of a diamond engagement ring was artificially manufactured. A brilliant marketing campaign that started in the 1930s by the DeBeers corporation has convinced Americans that we're supposed to give diamond rings. Even the idea that diamonds are valuable because they are rare is a myth. DeBeers has millions of diamonds that they keep in lockup in New York, Paris, London, etc to artificially control the supply, creating demand. It's been really successful marketing campaign, because even after having this knowledge, and verifying it with older generations (all of whom just have gold wedding bands -- no diamonds), I still felt like I HAD to get a diamond ring!
Still, it was the best $12K I ever spent; it got me my wife.
Another great website to go to is pricescope.com 
