Time has come to refresh the wardrobe a little, and the old woollen cycling jerseys need some young blood to compete against. What should I be looking for in a modern cycling top? Is lycra used anymore? Does the cut of the jersey (other than being tight) have any effect?
Fit is the most important thing I look for. A cycling top should fit snugly, without being skin-tight. Having less extra fabric will mean less air resistance, which makes a surprising difference at higher speeds. Also, too much excess fabric will flap in the wind, which can be annoying too.
Make sure that the length in back is long enough to cover your lower back when you're riding in an aggressive position. If a long-sleeve, the sleeves need to be long enough to cover your wrists with your arms extended out front. (some normal clothing fails these two checks)
One last caveat about jersey style: make sure the zipper opens far enough for you to be able to take it off after a long sweaty ride. I have one with a short zipper and it's a real struggle.
For materials, there's lots of nice synthetics to choose from that are lightweight, wick away moisture and are very comfortable in hot weather. But for cool or wet conditions, nothing beats wool.
One essential feature I have learned to appreciate in cycling jerseys is a tight fit around my neck, preferably with a zipper. I've had a wasp enter my shirt while I was doing 70+ km/h down hill on two occasions and it was all I could do to keep my bike under control while breaking as hard as possible.
Apart from that, like darkcanuck, I look for a tight fit, a long back, and long enough sleeves (for long-sleeve jerseys anyway). I prefer light synthetic materials for summer riding and wool for when the weather gets colder (I actually wear woolen jerseys all year round here in the Netherlands). An extra advantage of wool I like is that it doesn't pick up the sweaty smell as quickly as synthetics do.
If you do longer trips then check if the bags on the back are large and solid enough. I also like summer jerseys that have zippers to the bottom or at least low enough. This is especially practical when riding uphill on hot days.
Agree with previous posts, you want a perfect fit first and foremost.
Personally I also look for the particulars, like a good quality zip and proper stitching - its a dead giveaway between a knock-off and something that is going to last you the years to come.