I've done one batch with a dry yeast, and one with a liquid yeast (smack-pack). From what I understand, it is best to rehydrate the dry yeast, and to make a starter for the liquid yeast. To rehydrate, just pour the dry yeast in to a jar of pre-boiled water, that is cooled down to about your pitching temperature. You can just pour this on top of your aerated wort after cooling. The instructions that Schnitzengiggle left are very close to what I did for my starter. The main reason, IMO, for making a starter is to acclimate the yeast to the chemical profile and conditions of your brew, and to increase the cell count, because, for some reason, Wyeast and White Labs don't give you enough yeast to pitch directly to a 5 gallon batch.
One question I had, which I was able to answer through research on this forum, was can you refrigerate the starter after making it. From what I was able to find, you should refrigerate it after 2-3 days, and it will last you quite awhile as long as its refrigerated. It should be warmed to pitching temps prior to pitching it though.