There are many types of conversation in which that you can engage. As with any other individual, you need to gauge what interests and knowledge your counterpart has or, for that matter, if what you choose to share garners a response or not. Generally speaking, most people tend to stay away from past war history and politics. In talking about family, it will totally depend on the person. Some will have plenty to say and you can talk for hours together on this topic, or for some others, they know very little about their own family and stay away from that subject. In this case, perhaps talking about the success of the Japanese baseball players (Suzuki, Matsui, Matsuzaka) in the US, or asking about the status of sumo stars (Hakuho, Kaio, Asashoryu, Baruto) would be a good alternative.
Baseball is definitely a good ice-breaker. Before Matsui and Suzuki made their marks in the US, there would be Japanese games on TV in the later afternoon till evening. These days most of the Seattle, New York, and Boston games are getting aired in the mornings, as well as into early afternoon, so it has become an endless day of baseball on TV for the Japanese male.
Discussing arts and theater is an option either as a result of you expressing your viewpoint or from asking them to explain the Japanese tradition, but don't let it drag on if they look uncomfortable. Ask about Kabuki, Noh, or perhaps the museums in Tokyo.
You can compliment people as often as you like. They will usually respond that they don't deserve the compliment. It's a good idea for you, too, if you receive a compliment to perhaps say thank you, but then you should suggest you don't deserve it, as well. It's a modest response of denial and not showing off.
If your conversation takes place when you are sober, everything above applies. If people are becoming drunk, you'll be surprised where the conversations could head, so just be aware. Sometimes you'll even hear surprisingly good English language skills once people are drunk!
Tone of voice should generally not be boisterous. Keep a steady tone in speaking with people, as this mimics the monotone nature of the Japanese language.
There is not too much physical interaction, but very often today you will still get offered a handshake because you are a foreigner. When Japanese greet each other, they usually just bow. If you are a foreigner speaking Japanese, it will be 50-50.