Step 1: Cut the Wire and Wood
I used a miter box saw, wood rasp, and sandpaper to get the wood into the desired shape and smoothness. One thing to consider here is the weight of the objects you're going to hang on the hooks. For pots and pans, I used 1x2 lumber, but for some towel hooks I used a smaller piece.
Step 2: Drill Your Holes
This apartment is small so there's no real woodworking space. I drilled my wood over the kitchen sink to make cleanup easier. Be sure to choose a drill bit that is slightly larger than your wire in order to make it easier to insert the wire through the holes.
The spacing between hooks is another important consideration. The pot rack hooks are spaced about a foot apart, while the towel rack is spaced much closer together.
Step 3: Straighten Your Wires a Bit, Then Bend the Hooks
I bent the bottom hook first (see diagram), and then between steps 3 and 4, I inserted the pieces into their holes.
Step 4: Mount It on the Wall.
If you can't find the studs you may need a stud finder, a little electronic device which sells for about $10. I was able to see the drywall seams and nails through the paint due to shoddy workmanship, but you may not be so *ahem* 'lucky'.
Studs are usually spaced 16" from the center of one to the center of the next so a tape measure may come in handy.
Once you've decided where to put the screws, you'll want to drill pilot holes in your wood to prevent it from splitting. This wood is thin, and will probably split of you neglect pilot holes.
Now you can enjoy some extra space in your kitchen!