Depends on your budget, but brakes are not something to cheap out on.
First, are there any obvious leaks? These will generally be at each wheel (fluid dribbling down the inside of a tire) or at the master cylinder itself. Lines can rust and/or split, but it's usually a wheel cylinder.
If nothing obvious, jack up each wheel, spin it and have someone press the brakes. If you find one that doesn't stop, chances are the wheel cylinder is bad. If you can identify the bad ones, you can replace them individually, but honestly, you really ought to just go ahead and replace all of them.
If none of them will stop the wheel from spinning, it's possible that the master is bad. I actually don't know of any good way to test this other than opening up a couple of the bleeders, pressing the pedal and looking to see if it squirts out brake fluid. That's not even a great test since the wheel cylinders could be clogged.
If you have the funds, replace all four wheel cylinders, rebuild or replace the master cylinder, replace all the soft lines and assess whether or not the hard lines need replaced. Then, bleed the entire system until you have clean DOT 3 coming out of all the bleeders. If you don't do it all now, you will wish you had later.
Last edited by chicklin; 09/07/2010 2:25 AM.