Some criteria I use for selecting delegates (in order of importance):
1) Has the delegate revealed their realworld identity?
Exposing your identity is the single biggest deterrent to doing anything malicious.
2) What is their history/reputation in the community and forums?
Important, ideally in conjunction with #1.
3) Are they technically competent?
The client is not yet resilient enough to be managed by non-technical delegates. Delegates should be scripting their price feed updates and missed block notification, and should be able to react swiftly to attacks on the network.
4) Are they running more than 1 delegate?
I refuse to vote more than 1 delegate per person. Furthermore, if a person has more than a couple of delegates in the top 101 I will do my best to vote them ALL out. It is harmful and should be discouraged.
5) What is their payrate and usage of funds?
Obvious, but not terribly important.
Based on these criteria I think the quality of delegates needs to improve.