Dissertation Question Anyone?

Well, since I originally started this blog as a way to record our fertility journey and that is essentially stalled, I decided to write about something else..and since the next thing in my life that is all consuming is graduate school..ta da!
I met with a professor yesterday to begin discussions about the ever elusive dissertation question. She gave me some advice about how to start: take the three areas I am interested in, education, policy, and social inequality; and then list all of the topics below them, so for example under education it may say, achievement, testing, vouchers, etc. and then I have to rank order the topics ...and of course two things happen 1) you figure out that there is some overlap, for example vouchers is both about education, a form of policy, and a topic of social inequality ( BTW- I am NOT interested in doing anything about vouchers) and 2) you can begin to narrow the general areas to more specific topics...hopefully that helps *me* figure out a question.
Next she wants me to list all the books in these areas that are relevant, those I have read and need to read and figure out what my dissertation could potentially add to them. That seems like a tall order...I mean these are some brilliant sociologists, economists, and scholars, and I am supposed to *amend* their work??? This "literature review" of sorts will be part of my dissertation proposal which she would like me to write this semester...
So on the one hand this is good because it is moving things along, on the other..OMG- I am feeling a bit overwhelmed, incredibly anxious, and a bit intimidated at such a BIG task looming in front of me. Okay, back to work...making lists :) Thoughts? Those that have "been" there?