This thread has been pretty well beat to death, but I'll add one more tidbit, which is how to finish off the coil once made. The right answer is "it depends on what you are doing with it next".
1) Coiling down the bitter end of a cleated
line that is in use, like a halyard: Coil it up from the
cleat toward the bitter end, leaving about half a loop's worth of
line between the coil and the
cleat; then reach through the center of the coil, grab the
line between the coil and the
cleat, pull it through the center of the coil (i.e. slide the coil up the bight until it is against the
cleat), make a half twist in the bight, and hook over the top ot the
cleat. The coil will hang off the
cleat in the loop formed by the bight and stay there while sailing. When it comes time to drop the sail, pull the bight off the top of the
cleat, pull the coil away and drop it on the deck; the bight falls out and the rope will feed without tangles (especially if it was laid in figure eights as suggested by earlier posters.)
2) Coiling a complete rope to put it away by hanging from some hook like a
cleat or belay pin: Take a BIGHT of rope from the end of the coil and form a clove-hitch about the top of the coil using the entire bight. This leave a loop of rope (the bight) extending out the clove hitch to hang the coil off a pin.
3) If hanking the coil, do as you did in (2) but wrap the bight around the whole hank and pass the bight up through the top of the coil. A hank works best with the figure-eight lay and allows storage in less horizontal space.
All these methods are photographed in the Morrow guide to Knots, pp 18-23, which is my favorite on-board reference for knots.