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There's no simple answers. Try stuff out and see what works. We work on the principle that we all sugguest loads of stuff, and most of it gets "yeah - ok.... later.. maybe". Once in a while you get one that every one goes YES!!! NOW!!! When the whole band gets behind it, then it works. Occasionally we learn something without complete band support, and it rarely works out well - on the other hand when we had two guitarists we put some lighter stuff in while he was away on holiday! By the time he got back they were in the set, and gigged to great succsess, but in that case it was more that he wasn't on board with the rest of the band generally than that those weren't great songs.
Be cautious of crowd pleasers - while it's true you need to pick obvious well known tracks, when we've picked tracks just because they were well known hits they've fallen flat. Turned out the crowd thought they were old and cheesey too.
Equally we've put in songs we thought would be dead weight simply because we wanted to learn/play them. We learned Black Sabbath: Heaven and Hell just for the sake of it - something of an indulgence in a bar band set. I thought it might go down Ok with our fans - turned out it makes any place go nuts! We've played it to totally random audiences who weren't born back then and it's always gone down well. It's the antithisis of a good cover band track, but it totally works for us.
Summary:
Choose songs YOU think are great, not songs you think THEY think are great.
If someone has doubts then you should probably keep looking
Don't be afraid to throw in something YOU love. | 
