I have seen this type of bookbinding done many times and finally decided to do a test-run on making one. I gathered a few sheets of miscellaneous paper, cut them down to the same size and started punching holes with a hammer and punch. I was doing it quickly (my toddler was anxiously awaiting going outside to play ;o)), so some of my holes were crooked, but I basically just wanted to see if I could do it. I think it turned out pretty well and am ready to try making one with more sheets (and a back cover ;0)).
I also threw together some matchbook books - they are bigger than a standard matchbook (they are 2.25" x 3.25"), but I thought it would be better to have more room to write and make notes on the pages.