Although the best time to decide on a fireplace is when a house is being designed and built, you still have some options converting an existing fireplace or even adding one to a pre-existing home.
Wood-Burning Fireplaces: This is the traditional version in which natural wood is burned in a masonry firebox opening and the smoke goes up a brick chimney. It's beautiful, but has some downsides.
Traditional fireplaces are messy, require a continuing supply of firewood and the chimneys need to be cleaned periodically to reduce the risk of a catastrophic chimney fire. Adding a traditional fireplace with brick chimney to a pre-existing house is an expensive operation that is usually not practical.
Gas Fireplaces: Natural gas fireplaces can be just as pleasing as a wood fire and provide lots of heat with less maintenance. The "logs" are artificial and the flames are produced from natural gas piped into the back of the firebox.
Most gas fireplaces still require venting, but if your house does not already have a chimney a new gas fireplace can be vented through a wall. Modern gas fireplaces look so natural they can be difficult to distinguish from a natural fire.
Combo Gas/Wood-Burning Fireplace: This combination gas-wood fireplace allows you to burn real logs in the fireplace, but makes it easier to do so because the gas provides a reliable source of flame.
Electric Fireplaces: Although early versions of electric fireplaces were little more than a light bulb behind red and yellow plastic, modern versions of this idea can look surprisingly real. They provide heat, but require no messy fuel or venting -- and can even be operated by remote control. They will, however, add to your electric bill.