People have written some pretty solid advice, most of which I would follow. In the end, though, it is you who must decide when you are ready to take the test. From what I've read so far, I'd say wait until December 2008 or maybe even February 2009.
This varies with everyone, but it seems that most people need several months to internalize the techniques tested by the LSAT. It's not a test where one "crams," and then forgets everything he/she studied. It's a test that compels one to think in specific ways, so naturally it comes more intuitively to some than others. 6 months ago I took a PrepTest with no prior knowledge, scored about 138 and missed almost all of the AR (logic games) questions. I almost gave up on the spot. I've worked hard since then, and I started feeling ready to take the real LSAT a couple weeks ago (I'm scheduled for October 4). I've been averaging 165, with a most recent PrepTest score of 170. Now I'm maximizing speed and getting into "the Zone." People will have wildly different study patterns, but nearly everyone will need to spend 3-12 months preparing.
Once you start applying LSAT principles to almost every real-life situation (such as asking yourself "Under which of the following assumptions am I operating by posting a response to this Law School Discussion thread: A..." or "Which of the following, if true, would increase my chances of having a subjectively successful encounter with an unquestionably desirable partner at the upcoming annual Christmas Party, at which there exists a 75% probability of meeting such a subject: A..."), you're well on your way.
As you get more comfortable, take timed full-length Actual, Official LSAT PrepTests in increasingly distracting areas. It's one thing to take a PrepTest at your kitchen table, it's quite another to take one at the local transit center. Taking PrepTests in noisy environments should help build your ability to focus through any annoying distractions that come up during the real LSAT, as well as develop skills that will help you exceed our own expectations regarding your legal career.
Tear it up!
Very solid, and inspiring, post. I know other people who have gone from the 130's (or 120's) to the 160's -- it's definitely attainable, and you're correct that it's a matter of individual development, and being willing to devote the requisite time, whatever that may be.