Do you choose from a list of available projects or have to come up with your own? Either way you need to identify what interests you, do some reading around the subject and talk to potential supervisors first. You need to identify a gap in the knowledge and then a realistic way to address it using specific techniques and methods available to you.
As for choosing the topic. well it was just something I was interested in and once I realised I would actually be able to make a dissertation out of it, I decided to do so! Tips: do as much as you can early on, coz you never know what's round the corner.