Note: An unredeemed iTunes gift card or code is needed for this guide.
Note: If you cannot fully see the image, please press it to make it fullscreen. Tap it again to go back to the original size.
I learned this on About.com and made a Snapguide for it.
Scroll past the credit card information boxes.
You have now created an Apple I.D. without a credit card. This is particularly useful for kids with an iOS device, or a person who does not like giving out credit card information.