I am currently working to construct a language for my elf-like, mountain-dwelling race. I'm (sort of) following the Language Construction Kit that Neil linked to.
Here's what I have so far. Any comments or ideas would be greatly appreciated.
Vowels:a - short /a/ as in "father". Open sound ("ah") as in the Scandinavian name "Hans"
e - short /e/ as in "bed" when at beginning or middle of word. /ee/ as in "sleep" when last letter in word. Often written é when last letter.
i - always a long /e/ sound as in "sleep". No short /i/.
o - somewhere between long and short /o/. Pronounced like the /o/ in "over", but with similar stress as the short /a/ (This one is hard to explain...)
u - pronounced "oo" as in "too". No short /u/.
á - long /a/ pronounced "ay" as in "bay".
í - long /i/ as in "die".
ú - long /u/ pronounced "yoo".
Consonants:b - as in "band"
c - always hard (as in "cake"). No soft /c/ as in "cent".
d - as in "dog".
f - as in "fourth". Soft sound, never pronounced like /v/.
g - always soft /g/ as in "goat"; never like /j/ in "jam".
h - as in "hand".
j - always hard sound as in "joy".
k - pronounced like the /ch/ in "chalk".
kh - pronounced like the /ch/ in the German name "Bach".
l - as in "lamb".
m - as in "mop".
n - as in "never".
p - as in "people"
q - /cw/ sound as in "queen". Never requires a /u/.
r - as in "ran". Always trilled/rolled slightly.
s - soft /s/ as in "sore".
sh - pronounced like the /sh/ in "show".
t - "team".
th - /th/ sound as in "think", never pronounced as the /th/ in "these".
v - as in "volley".
w - as in "well".
y - as in "yell". Never used as a vowel.
z - as in "zoo". (Not sure if I will keep this sound in the language...)
Letter Combinations Forbidden:(these are just a few, more to come.

) bc, sz, scsh, gj/jg, fc, fh, pq.
Basic Grammar:All I have so far is that adjectival pronouns always come after their noun. (For instance "My mother cooks" would be written "Mother my cooks". Hope this makes sense...)
I'm pretty sure that I will rely on sentence structure to indicate tenses and all that jazz, so I will soon be making a list of pronouns and some verbs.