We started by researching (through use of contextual inquiries) how people used bookmarks in general, and how people used del.icio.us to store and share bookmarks. After we had some basic uses down, we constructed a persona as a primary user for us to design for. While our contextual inquiries shed some light on the process people use to share web links with other people, we used an affinity diagram to sort out the concepts into groupings that made sense to us. We separated out the user's tasks from their goals, and generally constructed a "user's mental model" that we could use in conjunction with the persona.
After identifying the pain points that could be redone within the website, we went about making mockups of our redesign proposals. This was done with paper prototypes, as paper prototypes allowed us to change parts of the interface on the fly.
Although we only completed one cycle of iterative design by testing then refining the prototypes, we were able to lay out the next steps we would take if the project encompassed more time than just spring quarter.