Hi there,
I wanted to bring to your attention a really good post from Jeremy Spiller about the 10 things that will make your relationship with your SEO agency a success. This covers things like budgets, expectations, results measurement... 10 really good tips to know about whichever side you are (client's or agency's).
Read the post:
http://www.whitehatmedia.com/blog/2009/10/27/10-top-tips-when-working-with-a-search-engine-optimisation-seo-agency/