There are many great products and projects going on everywhere. Even if they aren't great - it doesn't matter. People are realizing their ideas and doing what they love.
So, where are people finding their ideas?
I am a senior SW engineer, with some free time, but I can not get to start working on something. Simply no ideas, and I am not really keen on working on someone's else project.
I suspect you have them all the time, you just tend not to listen to them.
There's many approaches ...
"Serendipity" ... Random thoughts drop into your head all the time - learn to listen to them. The more you're taking notice of them, the more you'll tend to have. All sorts of odd things trigger - maybe something in the back of the truck you're stuck behind in traffic etc. "Wouldn't it be good if...". Make a note somewhere... always keep a notebook with you if you don't have a smartphone. I've even resorted to calling my own mobile to leave message on answering machine!
"Brainstorming" ... Trusted friend works best for me, maybe you're better with a group... but just bounce daft ideas off each other. Often you can get the germ of something interesting in relatively short time. And the germ of 20 ridiculous things, but hey!
"Scratch your own itch" ... What in your world SW or otherwise would make life easier, more interesting whatever. This may not be the best for a saleable product, but it's worked for plenty. The programming utility market is pretty flooded though.
"Be Open" ... This is a bit like trying to explain being in the zone, but the more you seek ideas, and are open to them, the more ridiculous ideas bubble up into your conscious. Encourage it, think them over and they'll come more frequently.
"Play games" ... Mind games in this case... find 20 things wrong or missing with Facebook / Basecamp, or 20 hates about whatever product you have near / use often ... too easy to get 20? Do 20 more then. When you're really struggling the silly ideas come. When your list is done you possibly have the germ of an addon, API plugin, alternative product.
"Scale / Change" ... What if we had 1000x more bandwidth - what would be interesting? (Realtime 3d video to mobile maybe?) 1000x less, knowing what we do now? (super compression?), 100x more CPU etc... No more yyy available? etc. Many changes will come - that's inevitable with IT. Things like Youtube work due in part to timing of available bandwidth for uploading/downloading - 20 years earlier it's just scifi. Handwriting recognition, RFID, barcodes all had their moment - there's more coming, just not ready for prime time.
Now... you'll throw 95% away, but you'll start to get some that are interesting, some that need thought, some for next year etc. Keep a list.
Don't rule out all the daft straight away - Twitter was a ridiculous idea - seems to have worked though, hey?
Hope that wasn't too vague to be useful. Good luck!
Many good ideas come from already working on some other ideas because as you gain insight in a certain field, you see more and more problems that should be solved there. Ideas hardly come from wondering about them.
Genadinik's suggestion is spot on. Lots of ideas stem from projects that people are already working on.
If you don't want to work on other people's ideas, you might be to focus on things that you are really interested in and seeing if you can spot opportunities there.
Another suggestion is to simply brainstorm beginning from any random idea you have. I know it sounds strange but it works. The more you begin generating ideas, no matter how lame, the more ideas you will have. In fact, the process is much better if you do it as part of a team. Somewhere in that brainstorming process there might be one gem that really inspires you.
For this latter strategy, the important thing is to just "start anywhere" no matter how dumb the initial ideas and no matter what the conceptual starting point (your current projects at work, your passions, etc.). Eventually you will begin to have really great ideas.
A good primer on being creative is Edward de Bono's seminal work Lateral Thinking. It really shows you how much our left-brain, scientific, analytic approach to problems and ideas has completely usurped creative thinking and he gives you the tools to train your mind more right-brain creative techniques. The irony is that it is written in a turgid, left-brain sort of way!
Especially if you're doing this on the side, motivation will always be a challenge - so I'd encourage you to consider doing something you're personally passionate about. Walk around with a notepad, and every time you find yourself thinking: "that sucks" or getting frustrated how inefficient something is to do, write it down. The vast majority will be impractical for a software startup, but you only need one idea to get started.
The other comment I have is regarding your not wanting to work on someone else's project. I appreciate this sentiment - you don't just want to be the code monkey for a business persons idea. But there are many advantages to pairing up with a likeminded developer who shares the same mindset and passions. Some people are just intuitively idea people - I have 10 startup ideas each day - needless to say there are other areas where I'm no good at all - clichaic though it is, everyone has their own strengths.
For my software, I saw a problem in the field in which I am trained (lawyer) and tried to address the problem with the software.
You don't have to be wildly creative to come up with ideas. In fact, most great ideas aren't all that revolutionary.
Pay attention to the way you work and the tools you use. There's a good chance that a working method you have (and assume everyone else uses) can be turned into a simple product. And there's a good chance that some of the tools you use don't do the job you need in the best way. Solving a specific problem better can also become a simple product.
That's all about scratching your own itch, in your own area of maximum competence.
A second approach is taking that same competence into an area you understand less well.
Find established, successful businesses that could benefit from your expertise, because they're using technology in a clumsy way, or they're using the wrong technology, or...
Then make contact - with people in that business, with customers, with competitors. This will help you appraise whether the improvements you could make would be a material benefit. Maybe that will open up a consulting opportunity. Or maybe you will find you have a way to define v1 of a competitor that can attack this established market areas and serve some group of customers better.
These two approaches are usefully complementary. The first points you at development, and is self-motivating. If you get to v1, at least you're improving your own life. The second points you at exploration, building knowledge and relationships rather than code.
So if (for instance) you decide to put an hour a day into this in the first instance, you can probably do both, because each can function as the downtime activity for the other, and chances are one of the two will tend to run down your batteries and the other will recharge them.