There is so much going on in an RPG that an elaborate backstory can be a hindrance. Plus, you don't want a character whose most interesting life events are behind him. I usually start with, "My character is named X. He is a ___ who ___." Then you figure out why he's with the other group members, what motivates him to adventure, and a few mannerisms, catch phrases, and habits.
I agree with this. In the beginning of a new campaign, too much background in a character can stifle creativity. Like real people, characters are far more interesting when you learn something new about them every so often. You should have enough description of the character to play them as distinct from other characters and little more. Worry about more background once the ball is rolling.
Writers for television shows specifically leave characters room to develop over time. Since we follow a similar serial format in a campaign structure, I think that it's a useful narrative parallel.
For example, it's perfectly acceptable to start off with, "My dwarf fighter is named Tordek. He adventures to prove himself to his clan elders and accumulate wealth." As the campaign progresses, the player and DM can jointly determine why and how the situation came to pass. Maybe in the Forge of Fury, Tordek's clan elders grudgingly approve of him recovering the weapons of Durgeddin the Black. The players seem a bit surprised that the dwarven elders aren't thrilled, so the DM and player decide why on the spot--Tordek's older brother Ralcoss was destined to be a great warrior and lead his clan, but suffered a debilitating injury when repelling an orc attack. They feel that Tordek is dishonoring his brother by outshining his achievements, but it's not a sentiment that they can directly express or really punish him for. He's just got middle child syndrome and has to deal with it.
As far as the initial party... I've never really understood the D&D tradition that the party members don't know one another when the campaign begins. Why not? As part of character creation, I have my players describe how they know one another and why they would be adventuring together before the campaign begins. Future characters that join the party must also have a connection.
For example, in my last ongoing 4E campaign, the characters in the party knew each other in the following ways:
• A shifter warden, he was a twin with our shifter shaman. He also knew the human fighter because they worked caravan escort duty together.
• A human fighter, he served with the warden on caravan duty and knows the human bard from tavern-crawls.
• A human wizard, he knew the bard from a regular arcane symposium and the shaman from ritual training.
• A shifter shaman, she knew the wizard from ritual training and is a twin with the shifter warden.
• A human bard, she knew the wizard from a regular arcane symposium and the human fighter from regular tavern-hopping when they have the cash.
• A goliath barbarian, he knew the shifter warden and the shifter shaman fro inter-tribal dealings.