Every DM must address the issue of speaking or not speaking languages in some form or another, even if resolving it by embracing the "common" language as an all-encompassing medium of written and spoken speech. The default assumption for D&D is that all or most intelligent beings will be able to speak a "common" tongue, and that makes traveling around a campaign world (or over the next hill) an easier logistical affair than would be otherwise. In this case, an adventuring party can show up in any town or city and find out where to sleep, where to get healed, where to buy armor and what nasty bit of business the local authorities would like managed. Or rather, speaking or not speaking a language won't be the reason the above is harder than needs be.
In my setting of Avandar, demi-humans are somewhat uncommon and in all cases but a few visiting or expatriated to the world. To fill that void of variety, I've developed distinct human cultures. Like many other commercially supported or home-brewed settings, my creations are similar to Earth's in the way that Howard's Hyborean peoples are vaguely or distinctly recognizable to us. Since I also use a world map that is derived from a speculative view of Earth's continents in several hundred million years, placing and ultimately blending these cultures and language groups happens rather naturally.
While it'd be great to say my peoples were highly original or invented whole-cloth: 1) That's not where my primary interests in world-building lie and 2) without a lot of visuals or walls of text explaining cultures I can quickly sum up to my players the broad strokes of a people: "Derosians.... basically, a cultural hegemony similar to the Romans or Greeks, though their empire was brought low mostly through internal struggles and an ultimately fruitless civil war. Mrung... hmmm, imagine a sort of confederacy of culturally-similar nomadic peoples... Huns and Mongols. They are seen as savages by your people but are a powerful group due to their numbers, military accumen and control of the overland trade routes between east and west." This approach is not unique to me, obviously.
So what of languages then? With so many of them and scarce opportunity for men to learn the tongues of elves, dwarves, etc... human players with a high intelligence often end up with one or more of these human languages. But what would the point of all this cultural diversity and bothering with languages be if everybody spoke common anyway?
My former way of handling this was to say that the more cosmopolitan locales had a great number of speakers of common, deciding that the language developed as a means for facilitating trade. The further and further one got from a city or trade town and the less and less the locals depended on trade and contact with others, the less likely "common" would be spoken. Recently, though, I've been pondering the actual utility of common. This has led me to the following set of guidelines as it relates to speaking languages that I will be implementing in my games.
Two speakers of common trying to relate to one another anything more than simple or trade-related concepts must each make a 1d20 Intelligence check. Failure by either party results in some confusion or misconveyance, introducing the possibility of an insult or other undesired result.
In this interpretation of "common" it is a widely known pidgin meant to facilitate trade and commerce between people that don't otherwise share a language. It should be based on some existing language or mish-mash of languages. In my specific use, this would be a simplification and "corruption" of the low derosian speech, widespread during and now after that culture's millennium of dominance. Common may be used to buy a mule or have a sword repaired. It can convey simple abstract concepts and even be a vehicle for the telling of a few crude jokes. One will not experience much clever word play when conversing in common. Historical treatises, epic poetry and government documents will not be conveyed in common. Speakers of the other languages specific to my setting may converse normally in their native tongue and any character smart enough to know additional languages may use them without penalty. Only use of common is subject to the above restrictions.
I see this as having the cake and eating it too. The use of a "common" tongue dispenses with the frustrating difficulties of a language barrier when you don't want to make that a feature of a trip to the smithy or negotiating a fair price for an inn room. But limiting its utility to mundane situations provides an opportunity for more role playing when stepping beyond the typical interactions a party has with the inhabitants of the game world, without shutting them down. It can create some added tension when conducting an important negotiation or other interaction. Imagine the party out in the open and outnumbered by a band of the aforementioned Mrung horseman, whose lands they have apparently stumbled upon. Based on an initial reaction role, each side is at least open to a peaceful settlement. But a misspoken word or misunderstood intention could lead to disaster. Get those d20's ready.