When giving out a magic item.  For example a spell scroll level 1.  What it a good way to decide what spell is on that scroll?  Should I pick one that fits theme? Fits a party character? For sure useful later on?

I am a new DM and the handing out of magic items is a concept I am not grasping very clearly.

Up to you.

Go for theme. Roll for it randomly.

In either case do realise if it is a Wizard spell and you have Wizards in the party this is a spell they get to add to their spellbook. When trying to reward them be sure to go for spells they do not have so they can appreciate it.

If you already know the next challenge they face giving them a spell you know will be useful can be a good way to ensure they will appreciate the reward.

Thanks.  The only spell caster in the group is a Cleric.  I was thinking of giving him a resurrection scroll. We have had a near party wipe. 

Seems like how to handle character death is a touchy subject too.  

Do note that some spells are balanced n design by having a high material component cost: Raise Dead, a level 3 cleric spell, normally costs 200 gp. If you are giving this as a spell scroll to the group this is a reward of "200 gp and a one-time use of casting a level 3 spell". Spell scrolls when used to cast a spell do not require components so a Raise Dead scroll would allow somebody to bring somebody back from the dead for free. Another complication in balancing is that you don't need to be a certain level to use a spell scroll: so even a level 1 cleric could use that scroll and if they succeed on the check basically get to cast a spell without needing spell slot, components, and 4 levels earlier than normal.

However, if you're planning a very difficult fight ahead then this could go a long way at softening the blow if things don't go in their favour.

My point is be considerate of what spells the party can cast and what spell lists they can access (you can only cast a spell from a spell scroll if you are a spellcaster and the spell is from a spell list you can use).