Here's what I did in Lion:
- The linen image is a file located in:
/System/Library/Frameworks/AppKit.framework/Versions/C/Resources/NSTexturedFullScreenBackgroundColor.png
- Opened it in Preview and made it just a little lighter (personal preference)
- Saved it to my ~/Pictures folder
- Brought up 'Change Desktop Background...' by right-clicking on the Desktop.
- Selected the tile image in the Pictures folder and selected 'Tile' in the format drop-down (above the preview images).
[crarko adds: Pretty straightforward. About the only thing I noticed was that I needed to either Export the file from Preview, or it also would let me make a duplicate using 'Save a version.' That's just because the file is owned by root, and read only to everyone else.]

