Let's be frank. We write erotica.
I am well aware of the longer plotted stories, but for most of the stories, the dialogue stays fairly simple. That being said, 'He said, She said' can get frustrating and unsexy in shorter stories, and mind-numbingly tedious in the longer stories. Unlike an obnoxious character, or a single confusing line, dialogue rarely goes away. The way you present your dialogue can be the difference between a fun sexy story and a migraine-inducing nightmare.
And because I like to ramble, here; in no particular order, are some tips to help you achieve conversation Nirvana.
BREAK IT UP
Just like a 500 word paragraph can strain the eyes, too much dialogue in one chunk can strain a reader. Humans operate better if information comes in chunks. Most information in our society is designed to be read and processed in chunks. Social Security Numbers, telephone numbers, license plate numbers, bullet points, I could go on and on. And dialogue in your stories should be broken up more then the Hershey's bar I just found under my mattress.
Do not misunderstand me and think that I am telling you to make your sentences shorter. You don't need to have your characters grunt and point like cave(wo)men. But a few breaks can make it easier on the eye and brain. Here are two examples of the same woman speaking.
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"I don't know Dan. I mean, I've liked you since we were kids, but aren't you worried about your friend Harold? I know that Harold and I broke up, but it might still be touchy for him. If we go any further, I don't know if I'll be able to stop."
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Samantha halted abruptly and pushed Dan away from her. "I don't know Dan." She panted, her round white breasts heaving at the top of her lace bra. "I mean, I've liked you since we were kids, but aren't you worried about your friend, Harold?" Dan winced slightly, looking at Samantha with a wounded expression.
Samantha bit her lip. "I know that Harold and I broke up, but it might still be touchy for him. If we go any further, I don't know if I'll be able to stop."
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Break up the conversation for 'reaction shots'. The dialogue takes a little longer to get out, but you're telling the story as you do so. The words are more integrated with the story, you can really sense them moving and thinking as they speak. Break up into more then one paragraph if you have to. Just remember that readers will absorb information better if it is in bite-sized chunks.
AH-AH! ONE AT A TIME DAMMIT!