You could have the best story line in the world, but it won't float unless you develop believable characters to carry it along and deliver the plot. Characters need to be three-dimensional; meaning that you should believe they are real! The way to create a 'real' character is through good back story.
A good example is the character of Lisbeth Salander in Stieg Larson's Millennium Trilogy (The Girl with the Dragon Tattoo, The Girl Who Played with Fire, and The Girl Who Kicked the Hornets Nest).
In the first book we are introduced to Lisbeth. She is described at odd, an outsider, possibly violent; abrasive, even. She dresses strangely in Emo goth style. She doesn't speak much or to many people, if at all. She's trouble. This describes about half the youth in the world, right? What makes her so special?
First, we discover she is highly regarded by her employer for her technical skills. We find out through the course of reading that she's quite the savant in the hacking world. That's something, but still doesn't make her standout...until we learn her back story. Little by little her past is revealed. We learn of her abusive childhood; how she lost her mother to a brutal father who beat her mother to death. Her mother, the only person in the world who loved her and protected her was taken from her at a very young age. Now we understand why she is distant from others; fear of loving someone and having them leave her. She's angry. She is put into state custody after trying to burn her father alive for killing her mother. While in state custody, she is further abused so she retreats inside herself, cutting herself off from the world so it can't hurt her anymore. Despite all that the world has done to her, she still longs for love and in her own awkward way, tries to help others who are victims of abuse. At this point, we have found a level in which to identify with her, and care about her. Lisbeth has become real because we, the readers, feel for her. We root for her and hope she overcomes her difficulties. We want her to succeed and be loved because we now love her.
Knowing how a character physically appears is important, but knowing how he or she thinks and why he/she thinks or behaves in a particular way is ultimately what brings that character to life. Through back story, we get hints of what we can expect from that character. A carefully revealed back story, like Lisbeth's in The Girl with the Dragon Tattoo, carries the entire plot along as we watch how she is brought into Mikael Blomkvist's world, how she reacts to it, and how she not only survives, but helps others. We also see her personal idea of justice; brutal, much like her childhood. She is a product of her experiences.
When developing a character, you might start with the basics of someone you already know. How does this person speak? What makes him or her tick? Why does he do the things he does and how does he do them? Is he basically good or basically rotten? What physical traits lend themselves to the inner workings of that character (eye twitches; chronic nose-blowing; clenching of fists when angry; tugging hair when lying, etc.) These physical traits can tell the reader something about the inner workings of that character's mind without resorting always to dialogue.
EX: The checkout lady kept up her chatter as she slowly ran each item across the scanner. He was in a hurry and time was running out. At his sides, he clenched and unclenched his fists repeatedly while the red-haired grandmother continued to tell him about how her granddaughter loved that same brand of crackers in her soup when she was sick. The smile never slipped from his face as he handed her the now crumpled $20.
We know from the passage that this man was clearly in a hurry and in no mood to deal with this chatty cashier. Through the action of clenching and unclenching his fists, we understand he is irritated, getting angry, and finally, we see the physical result of that in the crumpled $20 dollar bill; yet he never lets his smile slip. He said nothing to indicate his growing anger, but we saw it in our minds through his actions.
Ask yourself what makes your character relevant to the story? Who is he/she? What is the motivation/back story? Why is he/she there? How will he/she proceed? In essence, what makes him tick?
If a character isn't relevant, don't add him. A static character is boring and of no consequence to the reader. Even those who only make cameos in the story should have some purpose to the moment.
Next time? Good, believable dialogue!