Wired's How To WIki offers a few tips on how to avoid getting scammed on Craigslist from founder Craig Newmark himself. Key piece of advice: try to deal only with people you can have a face-to-face with.
If this is not possible, try and get a physical address from them. If the seller sends you a name and address to send payment to, look it up on a White Pages service, such as Yahoo! People Search. If the name and address matches a listing in the White Pages, that's a pretty good start.
The wiki page also includes excerpts from Wired's How To Use eBay page with similar advice.