For cryptographic purposes, what is needed is that the stream shall be "computationally indistinguishable from uniformly random bits". "Computationally" means that it needs not be truly random, only that it appears so to anybody without access to God's own computer.
In practice, this means that the system must first gather a sequence of n truly random bits. n shall be large enough to thwart exhaustive search, i.e. it shall be infeasible to try all 2^n combinations of n bits. This is achieved, with regards to today's technology, as long as n is greater than 90-or-so, but cryptographers just love powers of two, so it is customary to use n = 128.
These n random bits are obtained by gathering "physical events" which should be unpredictable, as far as physics are concerned. Usually, timing is used: the CPU has a cycle counter which is updated several billions times per second, and some events occur with an inevitable amount of jitter (incoming network packets, mouse movements, key strokes...). The system encodes these events and then "compresses" them by applying a cryptographically secure hash function such as SHA-256 (output is then truncated to yield our n bits). What matters here is that the encoding of the physical events has enough entropy: roughly speaking, that the said events could have collectively assumed at least 2^n combinations. The hash function, by its definition, should make a good job at concentrating that entropy into a n-bit string.
Once we have n bits, we use a PRNG (Pseudo-Random Number Generator) to crank out as many bits as necessary. A PRNG is said to be cryptographically secure if, assuming that it operates over a wide enough unknown n-bit key, its output is computationally indistinguishable from uniformly random bits. In the 90's, a popular choice was RC4, which is very simple to implement, and quite fast. However, it turned out to have measurable biases, i.e. it was not as indistinguishable as was initially wished for. The eSTREAM Project consisted in gathering newer designs for PRNG (actually stream ciphers, because most stream ciphers consist in a PRNG, which output is XORed with the data to encrypt), documenting them, and promoting analysis by cryptographers. The eSTREAM Portfolio contains seven PRNG designs which were deemed secure enough (i.e. they resisted analysis and cryptographers tend to have a good understanding of why they resisted). Among them, four are "optimized for software". The good news is that while these new PRNG seem to be much more secure than RC4, they are also noticeably faster (we are talking about hundreds of megabytes per second, here). Three of them are "free for any use" and source code is provided.
From a design point of view, PRNG reuse much of the elements of block ciphers. The same concepts of avalanche and diffusion of bits into a wide internal state are used. Alternatively, a decent PRNG can be built from a block cipher: simply use the n-bit sequence as key into a block cipher, and encrypt successive values of a counter (expressed as a m-bit sequence, if the block cipher uses m-bit blocks). This produces a pseudo-random stream of bits which is computationally indistinguishable from random, as long as the block cipher is secure, and the produced stream is no longer than m*2^(m/2) bits (for m = 128, this means about 300 billions of gigabytes, so that's big enough for most purposes). That kind of usage is known as counter mode (CTR).
Usually, a block cipher in CTR mode is not as fast as a dedicated stream cipher (the point of the stream cipher is that, by forfeiting the flexibility of a block cipher, better performance is expected). However, if you happen to have one of the most recent CPU from Intel with the AES-NI instructions (which are basically an AES implementation in hardware, integrated in the CPU), then AES with CTR mode will yield unbeatable speed (several gigabytes per second).