After Kimberly Loomis left some really good questions in the comments to my post on novella niggles (sounds like a character from some British kid's book, doesn't it?) I thought the answers deserved a post of their own.
I have been giving the matter some serious thought and the novella probably will happen. Though I have been looking at some back burner projects that might fit the bill, right now I think I would rather move forward and try something new. There are vague ideas but nothing concrete yet.
I like the idea of starting something where I can get from "once upon a time" to "happily ever after" in a quicker fashion than the 100k word monsters I normally produce. Which format do I prefer? Normally, novels. Ever since I knew writing novels could be a job, I knew that was the job I wanted. Still, there are times when I want to try something different and a smaller canvas (somebody stop me if I get too far into visual arts references) suits that idea better. Since I think in big, sprawling stories with angst and adventure if at all possible, the novel gives me room to do that. I do think, however, that "Never Too Late" and "Queen of the Ocean" have their share of sprawl, even though they are sold as novel bytes, so that's probably part of my core story.
Forming the novella isn't that different from forming the novel; the characters usually come first, they give me a glimpse of their predicament, often the beginning and the end (not necessarily in that order) and I work from both ends toward the middle. The big difference is that the story has to be more compact and/or concentrated. Less room to wander keeps the focus tight. Which can be a good or bad thing depending on what stage of the game I am in when asked.
How do I go about researching the places into which I put my characters? If it's choosing where the setting should be, I usually observe the characters doing their thing for a while and see what their story will involve, and then the time and place of that presents itself. When I do know the time and place, the research process starts. I've had some really good courses on historical research, but the details that stick with me the most are sensory/intuitive. Since I'm a talker, my favorite research tool is people; find me someone who is an expert in Thing I Need To Know and I will pick their brains. I also love living history museums, even if they aren't in the exact time or place of my story.