Licensing requirements
The practice of verifying all licenses for consistency is an important aspect of Savannah policies.
Software
Your license should be compatible with the GNU GPL, current version and any later version. This includes LGPL2.*-only, since those LGPL versions can be converted to the GPL version 2 or later. It also includes LGPLv3-or-later because we assume that the future versions fo the LGPL will be compatible with the corresponding version of the GPL. Of course, we strongly recommend against using LGPL*-only. And GPL*-only is not acceptable.
Manuals
Your license should be compatible with the GNU FDL, current version or later.
Others
We accept any free license for images and other data that are a secondary part of a package that is mainly software.
In any case, you cannot rely on incompatible dependencies.
Explanation
These licenses are the ones that the GNU Project uses for its own packages, and recommends for everybody else to use. They are also the most widespread, and being incompatible with them is a practical problem, because you would then be unable to combine code under those licenses with yours, and vice versa, even if it is free software.
Well-known licenses compatible with the GNU GPL are listed in the dedicated secion of the GNU license list.
Documentation
Informal materials, FAQs, and so on can be under a license compatible with either the GNU GPL or the GFDL (or both). Manuals themselves needs a license compatible with the GFDL.
Historically released manuals (before 2006) of hosted non-GNU packages which were licensed under GPL-2-or-later can remain on Savannah with their licenses, though we would like to change them if possible. However, existing manuals with other GFDL-incompatible licenses represent bigger problems, that we need to solve sooner or later. In addition, it is vital for all documentation files to have clear statements of their licenses.
In some case, it may be useful to dual license your application - that is, release it under two different licenses - to meet this criterion.
Dependencies
Your project dependencies also need to be compatible with the license you chose. This is not a Savannah-specific requirement, because doing otherwise would make your project legally inconsistent, and as such not freely usable.
For example, a project released under the GNU GPL may not be combined with code licensed under the MPL, because those licenses are incompatible. However, you can combine GNU GPL'd code with code released under the Expat license.
The FSF Licensing Team, may offer suggestions to find the best way to handle legal issues.
"Free" is for freedom
For non-software, non-documentation works, when we say "free" this refers to freedom. Licenses listed as free in the GNU license list are good examples.
http://lists.gnu.org/mailman/private/savannah-hackers-private/2005-July/000142.html (private archive) is the discussion thread with RMS about that point, and is summed-up in the previous sentence.
There's an interesting article about fonts on www.fsf.org.