Redcell,
I have met with about 8 SEO firms in the past 18 months. I don't know them all (and I will check out Jess's recommendation), but I feel very comfortable with four so far. 1) BruceClay.com 2) SageRock.com 3) PrairieWeb.com (not sure if they do SEO specifically, but I would trust working with them to manage site development and marketing). The fourth recommendation that I would make would be OneUpWeb. We use one of those four and we have been impressed by our results.
If you are near a
SearchEngineStrategies conference, I would highly recommend going even if you do not attend any sessions. I spent a day there talking to firms (in the vendor section) and learned more about the personalities of the companies than I ever expected to. This was very important to us as we wanted to make sure that we found a company that would work with us as a partner and not one that would just use us for our competitor list so that they could cold call all of them. Beware of those that are more interested in how they can use you rather than how they can meet your needs.

(I met several at the SES conference)
I also learned that there are vast differences in how SEO's operate. Pricing, technology, "plans of attack," can all vary significantly. The reason that I mention the four firms above is because all four of those firms were up front about how they would work with our site, and did not apologize or skirt questions about the techniques that they would use. Others concentrated on the amount of my budget and then played the booze card thinking that I would be a shoe in. They were wrong, and I would be happy to expose their names to you if you want to know who they are. Oh, to clarify, many offered a post-conference party, but some were so obsessed with partying with me that they were bragging on how great a time I would have if I chose with them, as if it had something to do with the quality of their work!?! In abnormal psychology, we had a name for those people... ALCOHOLICS. Sorry, little off-the-subject rant there.
Ok, continuing...
Don't always look at past success or "the biggest player" in the SEO market. I quickly learned that some of the old and obese SEO firms were obese because they got in early and had early success, but haven't learned anything new since then. I have met with at least two firms like this, and both firms knew little about SEO, but a lot about how to hound you until you gave in and said yes. It may work in New York, but in the midwest, we have learned the value of "I will call you if we ever need your services."
Fortunately, BruceClay.com was one who has been in the business a long time, but has not stopped learning. I guess that is what happens when you build a firm on people who survive on new technology and not on what wild twist they will provide at their next regional party. They are so technology-driven that they could barely contain themselves when I started talking about our project. You could see the wheels spinning -- it was pretty cool.

(yes, even Bruce Clay himself)
SageRock impressed me with their over-the-top honesty and openness about how they work. They also were very open about their practices and desire to see
us succeed. They also impressed me because at the time, they actually showed up when you searched for SEO in Google. They also sought to learn about us and our markets before optimizing anything. They made no promises about results, rather said that results come from using ethical practices. Of all of the firms, SageRock only takes on a certain number of long-term "partners" (customers) so that they never sacrifice quality for quantity.
PWIM.com (PrairieWeb) was impressive because they were on top of their game in many ways. They were 1) transparent about their approach, 2) interested in offering only the services that they felt were complimentary to your project, and 3) they knew what they were talking about. I spoke to "Brian" and he was all over my needs. He understood and agreed on how, why, and when we needed things done. He impressed me with their arsenal of products and services and didn't try to be the "be-all and end-all" of technology services.
Finally, OneUpWeb had a great direction and desire to apply to our project. They were a little different in that they used good marketing practice and expertise along side of SEO so that you could maximize your investment with them. (basically, you didn't need a marketing expert and an SEO expert, you got both with them) If you are working as eBusiness, using them might be a good opportunity to add flair at the same time that you add good rankings.
Ok, this is all my opinion, and subject to discussion and criticism. I will admit that not all of the firms that I mentioned are the most popular, but from what I know of them, we could have gone with any of them and I am confident that we would have been impressed by the results.