First let me say that to me there's a difference between a 5-star read and an all-time favorite. It's hard to explain why...I guess it's just that those on my all-time list have more of a "special place" on my shelf. I think of my all-time favorite list as books I would consider picking for a game of desert island (where you pick 5 books you could bring to a deserted island). Not all of my 5-star reads would quite make that list.
Looking at my list of books that I've given 5-stars to, there's not a lot they have in common. I have classics, modern lit, romance, young adult, fantasy / sci-fi, poetry, non-fiction, etc. I can't say "all of these books have (blank) in common" except for the fact that I loved them and think they're great. There's no one certain x-factor that gets a book on my 5-star list.
Anyways, when I finish a book, I usually try to write a review and rate it right away, because I base it a lot on how I felt at the end. A five-star read usually means one or more of the following...
a. It was great writing and it was hard to put down.
b. I was sad that it's over.
c. I own or plan to buy the book.
d. I will definitely re-read it again someday.
e. It made me feel happy reading it, (or appropriately disturbed, scared, sad, etc., depending on the type of book).
f. I'm likely to recommend it to others.
I also tend to rate books according to their genre. For instance, my 5-star romance reads wouldn't necessarily be equal to a 5-star classics read. And I think that's fair, because it will generally have the criteria above, and because I don't think it's right to compare across genres, at least not very closely. Of course a modern romance isn't going to compare with, say Pride & Prejudice, but that doesn't mean it's not a fantastic book in it's own category.
Anyhoo, that's my little explanation for my criteria. I think maybe I'll add something to this sidebar later with short descriptions for what my star-ratings mean. We'll see how bored I get at work.
Happy Reading!
~Sarah