A few years back, I wrote a blog post about wrangling iTunes. It's geared towards belly dancers, but I use a similar process for making yoga playlists.
In our Life Power Vinyasa format, we use music to complement the theme of the class, to bring the energy up or down, and to facilitate flow-on-your own parts of the practice. It's an important piece of the class, so as a teacher, it can be rather time consuming to gather playlists, but it doesn't have to be a nightmare.
This is how I do it.
The Prep Work
Step one: Listen to music. I'm also a dancer, and I've always just loved listening to music, so this part is easy for me. If you're not big into music, maybe keep a notebook or use an app like Shazam to "tag" music you hear on the radio so you can make note of music that strikes you. Listen to the radio. Use Pandora to find new music similar to what you like. Ask friends what's new. I'm into EDM right now so I love KCRW's Metropolis and Pretty Light's The Hot Sh*t for finding new jams. This system will work even if you're not into weird electronic music. Yogitunes is a great resource for yoga music, as is the New World Kirtan Podcast.
Play music during your own asana practice. Use what you like. Think about how the music makes you feel, what the energy level is like, and that will help you figure out what will work where in class.
Step two: If you haven't already, buy some music. I have a subscription to Rdio, which gives me access to a huge library of music to listen to. Lots of people like Spotify, which is the same sort of thing. When I find albums I like on Rdio, I buy them. Musicians are artists trying to get by, too. Buy music and load it into iTunes.
Step three: Fix your metadata. Make sure the artist, track names, genre, etc. are correct and useful to you. This will make your life easier, I swear, and thinking about fixing it later when you have 10,000+ songs in your library will make you want to cry.
Step four: Rate your music. Are you going to use songs you don't like in class? No. If you have a gigantic library, this will make things you love easier to find.
You could use the tagging method from the previous post to make smart playlists for various categories like "yin" "freeform" or "savasana" but since the more recent versions of iTunes have interfaces that put the focus on albums rather than playlists, I use smart playlists less, and instead drag and drop songs to make new playlists. I'll sometimes go back and tag songs afterwards so they'll land in a smart playlist for later reference, and I can fish them out later and recycle them in new playlists.
The plus (+) sign at the bottom left corner is the button to make a new playlist. Click on that and you'll get this great view with albums on the left and your new playlist on the right. There's several ways to add to a playlist, which is a little cumbersome, but is OK once you get used to it.
You can drag and drop songs from albums, artists, genres, etc. into your new playlist on the right side of the screen. Click on these screenshots for a larger view, if needed.
If you click the "Playlists" tab, it will take you back to the playlists view (shown below) and you lose the magic sidebar thing. Don't freak out. You can get it back by clicking on the "Add to..." button on the upper right. It only took me months to figure that one out.
You can copy songs from one playlist to another by dragging and dropping.
You can also drag and drop songs when you're listening or browsing by dragging a song or songs to the right side of the screen. The playlists sidebar will magically slide out and you can add songs that way.
Once you have all your songs, check that they flow well together. You don't have to listen to the whole thing, necessarily, but skip to the last few seconds of one track to see if it transitions smoothly to the next one. iTunes will tell you how long your playlist is, which is helpful. Also think about the pace of your class, so that you're not rocking out too hard in quiet parts of class or dragging the energy down with your chill music when you're trying to pick up the pace through a flow. Make notes after class so you can revise your list.
Hope that helps! Feel free to share your tips or ask questions, and I'll do what I can to help!