The Ben Ish Hai (Rav Yosef Haim of Baghdad, 1833-1909), in Parashat Bereshit (21), presents a number of Halachot relevant to the cup used for Kiddush on Shabbat (listen to audio recording for precise citation). First, he mentions that even if the cup is clean, one must rinse it both inside and out with water before Kiddush. Despite the fact that the cup had been rinsed after its previous use and one now takes the cup from the closet, its interior and exterior should be rinsed before Kiddush. The Ben Ish Hai also rules that a cup with any kind of crack or hole is disqualified for use for Kiddush. A slight crack disqualifies the cup even if the cup is otherwise fully intact and there is no hole. This applies both to the rim of the cup and to its base.
The Ben Ish Hai writes that before beginning Kiddush, one should fill the cup to the top with wine. Somebody else at the table should lift the cup with both hands and give it to the person reciting Kiddush, who should receive the cup with both hands opposite the left side of his chest. He should then remove his left hand from the cup, such that he holds the cup with only his right hand, and hold the cup in that way throughout the recitation of Kiddush. One should hold the cup at least one Tefah (approximately three inches) above the table during Kiddush. Additionally, one should look at the cup throughout the recitation of Kiddush, so that his mind remains focused on the cup. If a person does not know the Kiddush text by heart, he should look at the cup before Kiddush, and during the Beracha of "Boreh Peri Hagefen" (which people generally know by heart), and look in a Siddur during the recitation of the rest of Kiddush.
