Where do artists get their ideas for when designing spacecraft for games like gradius/r-type? Any guides/sources of inspiration where I can look to in order to create something similar?

I assume they just draw what they think looks good; I would suggest looking at different sprites and then just draw whatever you feel like it should look like. Sorry I cant be more helpful.

Spaceships are often based on ships and boats, modern architecture, and concept cars.

well if you look at the original f-zero and Wipeout 1 they where little more than sleds. Now they are more and more building up on those designs, so I assume they also look at whats already done for inspiration.

Also looking at existing jet engines, and everything interesting can help.

Ecksdee, has a couple of ships if you're interested.

I dont know about everyone else, but when i'm designing a ship i try to think of a) what looks cool while being functional b) could concieveably react the way i want it to in the game and c) Is it even physically possible?

For spaceships in particular you should also consider if they need to be atmosphere-capable; if not, then you have a great deal more liberty in how you design things, since the ship doesn't need to be streamlined. However, do note that you still need it to be strong enough to survive whatever g-forces it'll be subjected to, so you can't have, say, a pod with all the engines connected via a spindly tube to the main cabin (or else the engines would fire, break the tube, and leave the cabin stranded).

Even if your ships aren't going to be atmospheric, you should still take a good look at today's airplanes, especially fighters, although in space streamlining turns into pure aesthetics. Just remember that you can stick things on spaceships that would completely out of place on an airplane, like forward facing thrusters, huge laser cannons, etc.

At the simplest level, just draw out a cool looking wing design, then a cool nose design and go from there, sticking the appropriate gear on.

On a side note today's aircraft are built with G-forces in mind, and many can exceed the human threshold for sustained High-G.