So as far as I can see, there are three ways to make sounds:
1) Start completely from scratch and generate the waveform yourself
2) Capture raw sounds with a field recorder and modify them to fit your ideas
3) License a library of sounds, mine it for sounds you think might work and/or are cool, and modify them to fit your ideas
I'm going to be sticking with #2 and #3, thanks.
I created some sounds today, with no real direction; basically, I gathered a bunch of sounds I thought were cool, made some field recordings, and played with them until something cool happened. Thankfully, it usually did. Hopefully others will agree.
Realistic, concrete ideas are easy; if you want a tambourine sound, just record someone playing the tambourine. Gunshot? Record somebody firing a gun; better yet (and more safely), just find some gunshots in a sound library.
But how do you communicate something more abstract, like failing out of a song? Obviously this is a language the player has to learn anew for each game, but there's still a vocabulary that games share; it would be clearly inappropriate to hear a chorus of angels when you run out of Overdrive, or a wet splat when a bandmate saves you. Perhaps you start by asking: did the player accomplish something positive or negative? Is there important information to communicate?
So I guess that brings up another set of thoughts, that game audio should do these things:
1) Communicate information about the player's situation. Are those footsteps getting closer? Am I close to dying? Is my car running out of gas?
2) Give the player immediate feedback on their actions. Did I hit my target? Did I hit the correct drum pad? Perhaps even something as simple as...did I move forwards or backwards through the menus?
3) Provide ambience to foster immersion. Among the best at this is the Thief series, as well as the *Shock series, but even something simple like mooing cows on a farm can add a lot. And seeming incongruities can communicate a strong mood as well -- after The Shining, hearing grainy recordings of certain kinds of big band music fills me with utter dread.
Anyhow, these are the things I'm trying actively to think about these days, and actually pay attention to the sound in the games I play.
(1) Our games are a great place to learn about basic game audio, since we don't have to worry about placing sounds in environments or deciding how to alter them in real time depending on the player's location.
(2) Like the empty "click" of a gun that's out of bullets.
(3) Which my boss did. Whoa.