It's not as hard as you think.
When I tell people I make my own yogurt, they usually stop a minute and say something like, "You make yogurt!?" as though it were a magic trick. It isn't, really. All you need to be able to do is follow instructions and keep an eye on the temperature.
What you need:
1/2 cup of store bought yogurt, plain and with active cultures (Stoneyfield, for example)
1/2 gallon milk (any percent, and I've been told you can probably use raw cow's or goat's)
containers or mason jars
What you do:
1. Pour 1/2 gallon milk into large soup pot and place over medium-hight heat. Insert thermometer in milk and keep a careful eye on it. When the temperature reaches 200 degrees F, turn burner off and stir milk briefly.
2. Let milk cool to 117 - 115 degrees. While it cools, spoon the pre-made yogurt into a bowl and set aside. Also, preheat oven to 115 - 120 degrees and then turn it off (very important that you do not miss this step).
3. Once milk has reached desired temperature, ladle about 1/2 cup of milk into the bowl with the yogurt. Stir until smooth, then transfer mixture back into the milk. Again, stir.
4. Then pour milk/yogurt mixture into containers (I use two large ones, you could use many smaller ones if you so choose). Put the containers in a roasting pan and wrap them up with a bathroom towel or lots of kitchen towels. Place roasting pan into preheated oven. Let sit for anywhere between 4 to 6 hours. Once that time has elapsed, transfer containers of what is now yogurt to fridge. Consume when cold.
A note: Be sure you remember your yogurt is in the oven. Forget it and things may not go so well...as I know from personal experience. One evening I turned on the broiler in the oven and a few minutes later started to smell something burning. My yogurt, I discovered, was still in the oven and the towel it was swathed in had caught on fire. I managed to extinguish it before anything serious happened, but the whole thing left me a bit shook up. So, be careful (or leave a note beside your stove).
And if you like to top your yogurt with granola, I suggest trying 3191's recipe. It's the best one I've yet found.