I subscribe to Craft Gossip's daily gossip newsletter. A while back this tutorial was on featured there. Since I'm preparing to make some curtains for our house, I found this tutorial quite ingenious. Check it out at Lil Blue Boo. Ashley's tutorial is hand sewn, but you can use your machine to sew a straight stitch in place of the hand sewing she shows. There are a host of other interesting tutes there as well.
I was hoping to have some curtains completed to show with this, but...not done yet. I do have the fabric though. Great sources for curtain fabric, other than the fabric store, are sheets and formal dresses. We rescued about 40 formals from a boutique that were on the way to the trash. Some of those dresses will become my living room curtains. I'll post pictures when I get to that project.