Don't be immediately scared of a topic or "topics" in general. Too often, students are exasperated from the beginning because they don't feel they have any authority or knowledge about their subject area. That's not a great attitude to start with. Have faith in your own smarts and the course. Nobody's expecting you to be an expert or get your paper published in a journal, so just start jotting down ideas about things you are interested in. So step one is to relax.

Think about your first year psychology class, what areas were most interesting to you?  Try a little surfing on the internet, yep that right, just do a Google Search on whatever interests you!  When you go through your results page, try to stay with the academic sites (professors webpages, lab page's, reports on science, google scholar and even peer reviewed journals) however non-academic sites can be fun too!  An alternative idea is think about a problem and then see if you can find away to solve it. 

After you find a broad area, start looking at academic search engines like Web of Science, Ebsco, PubMed, Google Scholar and PsycWeb for example.  Read some titles and some abstracts. Absorb/make notes!  Abstracts are great sources of information, as you can read them quickly, check out the methodology and conclusions.  Reading 100-200 abstracts can make you a a bit of an expert in an area!  Eventually, you will find something is both interesting and has methods that can be carried out with the resources that are available to you (next to none).  Gather 20-30 papers one the topic (review papers are great at this time) and try to understand how the research as moved (or flowed) through recent times! One of the oldest secrets to conducting good research is "read the reference section of the paper you just found".  The authors who published the current article are smart enough to get it publication, so if you read what they have read \you too will be smart enough to do the same.  Collect, read and take notes/annotations as many articles as you can in your area.  Sooner or later you will identify a real problem, question or controversy that needs to be answered.  Ask your self questions like, if I were these authors, what would I do next, what problems remain, is there disagreement in the field, what are some alternative explanations and of course can I design an experiment to test this? Whatever you do, don't try to come up with an idea before reading the literature! Another secret is to look at the discussion section of the research papers, as often researchers will state what need to be done next.   

The real key to successful research is that you can actually enjoy the journey <gasp!> you need to be motived, which is why your topic choice is so important. Once you have started reading ideas will jump out at you, start writing down them down.  This may be a good time to see your professor and discuss the area with them.