I had to conduct a pretty extensive literature review as a component of my undergraduate thesis. When the time came to apply to graduate school, I just went back and looked at researchers who had published work that I found compelling. I just looked them up, and found out where they were doing research.
Doing that gave me a decent list (~10-15) of schools. From that I further narrowed the list down based on how good of a fit I thought the program was more generally (other faculty member research interests, location). I also cut out a couple of programs where, although I found the POI's research interesting, my research experience was only tangentially related to what they do.
Ultimately I ended up applying to 6 schools. I've heard positive things (interviews, but no official acceptances yet) from 2 schools.
They are both great programs that I am really excited about, and I am really happy with the way things have gone. I think my method for selecting schools was good, but perhaps incomplete. I think that applying to six schools is a bit on the low-end of the recommended number, and since applying I've discovered a couple of other programs that I might have liked to apply to.