This is how I wrap my sling cords to stop them tying themselves in knots in my pocket.
My sling
Fold it in half
Holding the pouch in one hand and the ends in the other, use your index fingers to pull the cords into an S shape right next to the pouch
Then start wrapping, leaving enough of a loop free on the right to get your finger through later
The first wrap is important, it holds everything together so make it nice and tight
Wrap towards the pouch laying the turns side by side
Once you have used about a third or more of the free cord, wrap back the other way making a second layer
Once you have got back to where you started, push a bight of the remaining cord through the loop you left unwrapped at the end
Now take the pouch and pull, this traps the bight and holds it securely
Releasing the sling is like pulling the pin out of a grenade, just take the free ends and pull them out and the whole thing unravels
[EDIT]
Added this link since the flickr urls no longer work...
http://www.flickr.com/photos/23628261@N07/sets/72157612398145123/