The continuous technical progress of the smartphone built-in modules and embedded sensing techniques has created chances for context-aware automation and decision support in home environments. Studies in this area mainly focus on feasibility demonstrations of the emerging techniques and system architecture design that are applicable to the different use cases. It lacks service customization strategies tailoring the computing service to proactively satisfy users' expectations. This investigation aims to chart the challenges to take advantage of the dynamic varying context information, and provide solutions to customize the computing service to the contextual situations. This work presents a rule-based service customization strategy which employs a semantic distance-based rule matching method for context-aware service decision making and a Rough Set Theory-based rule generation method to supervise the service customization. The simulation study reveals the trend of the algorithms in time complexity with the number of rules and context items. A prototype smart home system is implemented based on smartphones and commercially available low-cost sensors and embedded electronics. Results demonstrate the feasibility of the proposed strategy in handling the heterogeneous context for decision making and dealing with history context to discover the underlying rules. It shows great potential in employing the proposed strategy for context-aware automation and decision support in smart home applications.