I've always thought of Lily as like the perfect mixture of all the Houses; I'd expect that she was a hard one for the Hat to place!
I picture her like a Hufflepuff because of the caring quaities she displayed by sticking up for Snape whilst he was being taunted. That can't have been the first/only time she's done something like that, so that leads me to believe that she had a bit of a 'Puff in her.
I see her as a Ravenclaw because of her apt for Potions, and probably Charms. I have pictured her as a good student, willing to stick up for what she knows. A passionate learner.
A Slytherin because of her ambition to do well. I doubt that she was lazy, and can see her wanting to be the best.
And last, and formost, a Gryffindor. She was brave enough to die for her son, and fiery enough to stand up for and against her peers.
The hardest thing I find is giving Lily her fair share of flaws. Perhaps she was too headstrong, cocky even. She was probably grudging, and maybe stuck in her ways.

