My own preference is to try to avoid or minimize the use of endangerd tropical hardwoods and other exotic materials, in favor of those that are sensibly and sustainably harvested. Ideally, I like to find the tree, log or plank of wood myself and know where it came from and who cut it. Often this simply isn't possible, or the customer has specific needs or desires that can't be met within the limits of this approach.
Some woods, like ebony for finger boards, serve a function that is hard to replace. Still, there are a number of wonderful domestic hardwoods that make great guitars, and I've found a few locally in California and on the west coast that I've become very fond of using. I have on hand beautiful, figured Black Walnut, flamed Big Leaf Maple, Black Acacia, and Cherry for backs and sides. I use the Walnut almost exclusively for necks.
For tops, I'm committed to learning the mysteries of Redwood, since I have a lifetime supply in our back yard, in the form of old stumps and logs left by a turn-of-the-century logging operation (Redwood resists decay very well). Of course, I have a stock of some of the more common topwoods, as well: Western Red Cedar, Sitka Spruce and Engelmann Spruce. Any of these can make a great guitar, and offer a range of tonal and aesthetic qualities.
A few years ago I had to finally give up using nitrocellulose lacquer. I'd developed such a sensitivity to it's toxicity that I can't even open a can of it in the shop now. It's dreadful stuff, and will certainly be phased out of general use, eventually. For a number of years I've been using one or another of the "waterborne polymer" finishes, which generally seem to be some combination of acrylic and urethane resins. Although they apparently contain less volatile organic compounds than traditional lacquer, and are therefore considered to be safer for the environment, this type of finish still contains solvents that are not good to breathe. Because of my chemical sensitivities, I've started to get sick using this material, though not as much as with lacquer. Investing in an elaborate powered-air-respirator has helped with the problem, but recently I've gotten sick simply from an instrument "gassing off", even after the finish has cured for a week or so. In the summer of 2005 I finally decided to learn how to French Polish, using grain alcohol and seedlac, with nothing else but a tiny bit of oil in the later stages of application and polishing. Although I'm slightly bothered by the alcohol fumes, I've been impressed that there is no detectable gassing off after 12 hours or so, and I can even do some of the application with no respirator. The finish is beautiful, earthy, and seems harder than the waterborne stuff I'd been using; I intend to move toward finishing all my tops with this. For backs and sides I continue to use an oil-based finish. The product I've been using since about 2001 is called "Kunos"; it's basically linseed oil with citrus oil as a solvent and natural dryers added. It is sold as a low-toxicity floor finish, and can be built up to a varnish-like coating. I prefer to minimize the build-up by using only about 3 thin coats, rubbing them out in between, to achieve a glowing satin surface that is very much "of the wood" rather than on top of it. This oil varnish, while less bullet-proof than a hard lacquer-type finish, is light in weight, offers protection against moisture and reasonable use, and is easy to touch up if it gets scratched.