How to prepare for exams
The most important thing any student can do to prepare for exam is to start early. The days of studying for an exam on the bus going to school are over. Even if you got A's this way, it's not going to work very often with college material. College courses require far more effort.

Start preparing for the next test the day after you take the prior one. Daily preparation is crucial. At a minimum, review material once every week between exams.
How much time is needed? The classic question. Some recommend 2-3 hours outside of class for every hour of class time. In some cases homework problems will require this much effort. For a straightforward lecture course try the following:
Every day before class, preview the material for 15-20 minutes.
Attend every lecture. Seems simple but it's the biggest misteak students make.
Take good notes. Learn how.
Spend another 20-30 minutes after class going over the notes.
Use this time to get any confusing points cleared up in your head; much better now than later. This will make later exam prep. MUCH easier.
Once a week, review the material to get a more complete overview of the information.

Preparing to take an exam:
If you've been keeping up on everything on a daily and weekly basis you're in good shape when it comes time to get serious about preparing for an exam.
The first thing you need is a plan. You need to answer some questions:
What is my schedule like during the week of the exam?
Do I have other exams or papers due?
Will I have all week to prepare or will I have to study over the weekend?
How many pages of notes are there?
How many chapters do I have to read?
All of these questions will help you answer one basic one: How much time will I need? The answer will depend on how much work you have done so far. It's a crucial question because the next step will be to come up with a plan.

Start with with the day one week before the exam. That's the first day to start studying in earnest. Literally plan out how many hours you will spend each day studying until the exam. Make a schedule and stick with it. Be sure to leave time for group study or review sessions. Also break up the material in to parts and cover a little each day. Consider these questions:

How much material will I cover each night?
How much time will I spend studying with a friend?
When are the review sessions?
Will the Prof. or TA be available to answer any questions that come up?
Once you have a game plan it's time to get to work. There is no one way to go about this. Remember is important to come up with a system that works for YOU. Here's a suggested plan of action:

Step 1
Get a blank piece of paper and outline the material you need to study. This helps develop a "big picture" overview of the material. Start with big topics and leave room for subtopics. Fill in the information as best as you can. Get another sheet of paper and start over if necessary. Once you see all the units of information in front of you it will be easier to organize your studying. This will help you with the next step.

Step 2
Break the material into smaller chunks and study each one. Only once you understand each one should you move on to the next. Do this part alone in your quiet study place. This is when you start to memorize the information you'll need later. Write down any questions that you may have.

Step 3
The next step is to work with someone else to clarify anything that's confusing. Work with others, go to review sessions, see a tutor, or work with the professor or a TA. At this point it's important to make sure that everything is clearly understood. This is crucial. If this step is skipped then you're left with trying to memorize hundreds of useless factoids. It will never mean anything to you later.

Step 4
Now it's time to put the information into your brain for retrieval. If you've been working all along you will already remember much of it. Make sure nothing is left out. Review the tips on memory. Many students focus on this step exclusively. It's called cramming. Just say no.
Some thoughts on cramming (or why cramming bites)

Step 5
This next step is not needed by everyone but it's useful if you are having trouble with the course. You've been studying for hours and hours but, do you really know anything? Try working with someone else who will ask you questions about the material. If you can answer and explain concepts without too much effort then you're in good shape. Usually this help to expose areas that require more attention and study.

Step 6
If the previous step went well then all you have left is to work on weak areas and a general overview the material. If you didn't do well explaining the material you'll need another round of steps 4 and 5. Hopefully you left time for this in your study schedule.

If you planned well and kept up with the work there should be little anxiety the night before an exam. If you started late or waited to get questions answered then you'll be busy the night before. This will add extra stress and you'll likely make stupid errors on the exam. At the very least you'll be more susceptible to getting sick which will worsen your situation.

The only thing that should be going through your mind the night before is a senseof confidence. It's ok to be a little afraid or anxious but not panicky.

Below are listed some other specific suggestions.

Other tips:

Flashcards - help to memorize facts NOT understanding
Groups - good to work through difficult material, quiz each other for understanding
Review sessions - only go to early ones, last minute reviews sometimes cause needless confusion
Tutors - get help early, waiting till the last minute only fosters aggravation and panic