Since sheep are now persistent in Minecraft, whats the best way of herding them into a pen or farm?
Our current solution is to use a combination of fishing poles, buckets of water, and simply pushing the sheep till they all fall down a 1-space wide hole, then herd them using water to our underground farm.
I saw an interesting design somewhere where the player made an enclosed pen using fences, and put stairs around the edges so the animals could be pushed up the stairs and into the pen, but couldn't escape.
You could also use a system of water canals to try to bring sheep farther away closer, making the task of pushing them into the pen less cumbersome.
In the current version of Minecraft, there are now two ways of more easily herding animals.
Wheat - Hold it in your hand (without clicking the sheep) and they will follow you. If you are herding other animals, wheat will herd cows, carrots herd pigs, and seeds herd chickens. This will work for several animals at once.
Leads - Right click the sheep with the lead in your hand, and it will attempt to follow you around. A lead only works for one animal at a time; you can hold multiple leads at once, but each animal will require a separate lead.
Actually, what I found out today is that if you pull out some wheat and hold it in your hand, sheep and pigs will follow you around if you walk slow enough. I saw it earlier when I was feeding my sheep and farming at the same time and I brought out some wheat by accident and seeing as how you feed wild dogs meat to tame them, I figured why not try it out?