In the beginning of Shirat Hayam, in Parshat Beshalach, (שמות טו:ב) Bnei Yisrael sing the phrase זה קלי ואנוהו "This is my G-d ואנוהו." The word ואנוהו can come from the root נוה meaning beautiful, as in הנוה (ירמיהו ו:ב) or"dwelling place" as in אל נוה קדשך (שמות טו:יג), "to your holy habitation." ואנוהו can also come from the root נאה meaning "beautiful," as in מה נאוו (ישיהו נב:ז) "how beautiful."
Targum Onkelos translates the phrase as "I will build him a sanctuary," Rashi explains that the Targum sees ואנוהו as coming from the root word נוה meaning "dwelling place". The second opinion in Rashi is that ואנוהו comes from the word נוי meaning "beautiful." He says that it means "I will talk of G-d's beauty and praise him to the world".
Ibn Ezra explains the pasuk "He is my G-d and I want to make Him beautiful," also using a root word נוה. Rashbam points out the parallelism between the beginning of the phrase, "This is my G-d and I will make him beautiful," and the end of אלוקי אבי וארוממנהו "my father's G-d and I will exalt him." Since the word ואנוהו parallels the word וארוממנהו, ואנוהו must mean to glorify or to make beautiful.
The Mechilta quotes differing opinions regarding ואנוהו. Rabbi Yishmael understands ואנוהו to mean "to make him beautiful." He asks "How is it possible for a human being to beautify his Creator? Adorn Him by doing mitzvot in as beautiful a manner as possible." For example, acquire for oneself a beautiful lulav, make a beautiful sukkah, make beautiful tzitzit, and make beautiful tefillin. Abba Shaul says that it means to imitate G-d's traits of mercy: as G-d is merciful and compassionate, so too we must be merciful and compassionate. (Rashi, in Shabbat קלג:, explains that ואנוהו is a contraction of אני והוא, "I and him," I should be like him.)
Rabbi Yishmael's opinion above is the source for the Halachic concept of hiddur mitzvah. The Gemara (Shabbat קלג:) explains ואנוהו to mean "I will adore Him with Mitzvot by making a beautiful sukkah, etc." This explanation of ואנוהו meaning "beautiful" is also found in Succah לג. and Gittin כ., where the Gemara brings the Pasuk of זה קלי ואנוהו to be the source of Hiddur Mitzvah. In Succah, the Gemara brings this Pasuk as the source for the Halacha that one should tie his Lulav together (לולב צריך אגוד), to make the Mitzvah of Lulav nicer. In Gittin, there appears a case where a Sofer writing a Sefer Torah comes to a place in the Torah where he must write the name of Hashem (Y-H-V-H). In error he has in mind to write the word Yehudah, but he accidentally writes Hashem's name. He may not write over the letters because the Sefer Torah will not look nice with this darker "double" lettering.
Rabbi Samson Rafael Hirsh explains ואנוהו from the root נוה relating to נוח "resting place". He says the phrase, "this is my God" means that I accept Him as my God, therefore I place my entire being in His direction and guidance. ואנוהו, therefore, means "I offer myself to be His home." My life shall be a home for Him where he will dwell.
The ideas of hiddur mitzvah and making a place for Hashem come together in the word ואנוהו. By doing Hashem's mitzvot in as a beautiful and pleasant way as possible, I create a beautiful worldly home for Him to dwell. My beautiful and ethical acts glorify Hashem in this world.