What an enormous amount of wonderful advice. All of us were in your shoes at one point or another. Welcome aboard.
As a fellow traveller from NJ, I'll give you my two cents I have status on Continental but I stopped using their credit card a long time ago. Most of my domestic flights with them are not that expensive. When you combine that with the difficulty in getting standard rewards from Continental, I simply no longer covet those points.
The main issue, for me, is the desire to travel Business or First Class for long flights - Europe, Mexico, California. I have found it pretty impossible to get standard rewards from CO for those long flights for the front of the plane. By carrying and massively using the Starwood AMEX, I have a stockpile of points I can transfer to most airlines (Continental and United are notable exceptions; you can transfer but the transfer rate is punative). I figure out where I want to go, see who goes there and has tickets I can get for a reasonable amount of points and transfer my points accordingly.
It may sound hard to believe, but with the tricks I've learned on FlyerTalk, I have been very successful transferring my Starwood points to Cathay Pacific and having them book reward flights for me on their partner, British Air! I know it must sound crazy to you and I too was intimidated by the process before I tried it but like most of the tips you'll get here, it was pretty easy.
If you become like most of us, you'll actually get to enjoy the process and look forward to getting the biggest bang for your points! When we went to Italy last summer, Continental wanted 250,000 points for Business Class from Newark. We flew British Air for 80,000 points - 20,000 less than CO wanted for Coach seats! And we threw in a few days in London to break it up.
Finally, I have had incredible hotel stays at many Starwood hotels. The fact that they don't limit reward rooms means that you can almost always get a room wherever you want for the basic number of points. You can often use extra points to get an even more special room. Like all programs and chains, Starwood is not perfect, but until Ritz Carlton comes out with a program and a credit card, I'm sold!
I truly hope you enjoy the process. I cannot begin to recount the wonderful and free trips we've had over the last five years.