VPN - Virtual Private Networks, Another Way To Ensure Privacy

Before we get to the interesting part, first a little bit introduction about what a VPN is -

Put simply, a Virtual Private Network, or VPN, is a group of computers (or discrete networks) networked together over a public network—namely, the internet. Businesses use VPNs to connect remote datacenters, and individuals can use VPNs to get access to network resources when they're not physically on the same LAN (local area network), or as a method for securing and encrypting their communications when they're using an untrusted public network. When you connect to a VPN, you usually launch a VPN client on your computer (or click a link on a special website), log in with your credentials, and your computer exchanges trusted keys with a far away server. Once both computers have verified each other as authentic, all of your internet communication is encrypted and secured from eavesdropping. (lifehacker)

So basically, what happens here is that the data you send is protected from eavesdropping. It is encrypted in a way that can't be decrypted easily. So, other than the two methods discussed earlier, VPN is a method to stay anonymous too.

What are the advantages of using a VPN?

Your data is encrypted.
No-one can eavesdrop your communications.
Your privacy is ensured.
You can pretend to be someone you are not (You wanna use some service which is banned in your country, VPN is the answer).
You can overcome browsing restrictions imposed on you.

What makes a good VPN?

Price - Hell yeah, it should be priced reasonably (did I forget to mention VPNs are not free of cost)
Free? Yeah, there are some free VPNs too. They serve you ads and are more or less useless. They dont do what they promise. They are good for beginners though, who want to learn, and privacy is not much of a problem.
They should use SSL. If you have no idea what this means, then, simply put, its the best protocol the VPNs use, and all others come next to SSL. (other protocols have their own pros and cons)
Logging- Some VPNs log your data. Not good.
Exit location - There must be a lot of them. That is, you can pretend to be a lot of people. Also, if there are very less exit locations, then it will affect browsing.