One can create a playlist simply by selecting multiple tracks (from either your Library or another playlist) and then holding the Shift button while clicking on the Create Playlist button in iTunes. The playlist will be named after the artist, if only one is selected. If multiple artists are selected, it will be named Untitled Playlist, with the title field active for editing.
This works on both iTunes 6 and the new iTunes 7.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20060913010024795