Flight Levels are easier to work with for ATC and for pilots since everybody will use standard pressure setting. Effectively it means less work load and lower probability of making an error with a safety impact.
Typically the highest terrain elevation plus some margin is used as transition altitude. This gives the highest number of flight levels available.
For example in the Netherlands, being a flat country partly below sea level and the highest obstactle at about 1500 ft, has a transition altitude of 3000 ft for IFR flights and 3500 ft for VFR flights.
There is (was?) an initiative to create a common transition in Europe, but I haven't heard anything about it for a while. Some interesting reference documents were produced:
Towards a Common Transition Altitude - A Flight Deck Perspective
A Common European Transition Altitude - An ATC Perspective
(both files in PDF format)