Dialogue has little to do with recorded speech, by that I mean that if you recorded a conversation then wrote it down verbatim it would almost certainly come across as crass and boring. Dialogue is a stylised form of speech – just another way for your characters to communicate. Much of normal speech is missing from dialogue – the boring bits – and only the main content is included.
‘He said’ or ‘said he’? ‘He said’ is found more often in modern books, so it may depend on what genre you are writing. In the end it doesn’t really matter as long as you are consistent. The saids are quickly screened out by the reader’s mind and become invisible. However, if you start switching between ‘She said; and ‘said she’ the saids magically lose their invisibility and the dialogue becomes laboured.
What about ‘asked’, ‘described’, ‘enthused’, ‘shouted’, etc? Trying to think of as many descriptive words as possible not only make the writing laboured, which slows the pace (more about that below), but also draws attention to the writing itself rather than the interaction between the characters.
Where a pattern of saids has been established, then dropping in the odd, more imaginative descriptor, can have a big impact – save the flowery descriptions for effect: use them sparingly.
Is there a better way? Personally, I prefer to use character description and action to indicate who is talking, and their choice of words should give a good clue as to their emotions: John ducked, ‘Hey, watch out.’ Marvin compressed fresh snow between his gloves, ‘Better get running,’ he lobbed the snowball at the retreating John.
I also prefer to use distinctive voices for characters so you should be able to tell who is speaking without being told. e.g. In Helium3, Tarun always speaks with long rambling sentences strung together with comas, where-as Aurora’s speech is always clipped and composed of short sentences. Of course you could introduce regional accents to further distinguish between characters.
Pace. Oddly enough, dialogue is not only about characters communicating, it is also about pace. Dialogue, by its very nature, increased the pace of your writing. A page of dialogue is much quicker to read than a page of prose. It your prose is becoming laboured then sticking in some dialogue, even if it is reported speech, can lighten the whole thing up.
Dialogue doesn’t just travel at one speed though. You can very the pace by putting in or leaving out identifiers, description, and action. If your dialogue is running away with itself, then slow it down by put in some saids, or break it up by describing some action. If you want to create a sense of panic or desperation, then take out everything except the dialogue itself until it’s running over itself. It all depends on what mood and feel you want to create.
I think staring a story with dialogue is always a good opener as it instantly gives the story pace, momentum, and interest.