All you need to do is to fill in the boxes to generate the code at
http://developers.facebook.com/docs/reference/plugins/like

My code looks like

<iframe src=”http://www.facebook.com/plugins/like.php?href=http%3A%2F%2Fwillyfoo.com&amp;layout=standard&amp;show_faces=true
&amp;width=280&amp;action=like&amp;colorscheme=light” scrolling=”no” frameborder=”0″ allowTransparency=”true” style=”border:none;
overflow:hidden; width:280px; height:px”></iframe>

If you’re using WordPress, just go to Widgets and create a text widget and paste it in! Simple as that!

Update (27th Apr) : If you want to add the ‘Like’ or ‘Recommend’ button to individual blog posts, just add a plug-in.
There are a few available, I’m using http://blog.gunnjerkens.com/2010/04/facebook-like-plugin-for-wordpress/

The video can also be seen on my public profile on Facebook.

Since i’m meddling with it now, might as well update it with a few new plugins like Facebook Connect and perhaps Facebook Updates..

Update: Ok.. need to get an API key from the Facebook Application Registration Page, it then asks me to wait for a while for the API Key to propogate to other servers but I’ve a feeling something’s missing here.

Update: What was missing is that I needed to fill in the “Connect URL” in the “Connect Tab” in “Edit Settings“! Viola.. please help me test if this works!

Update: Hmm.. the “Facebook Connect” button only shows up in the Site Admin login but not the comments box.. have to find out how to include that.

Update: A line needs to be included in comments.php

<?php do_action(‘fbc_display_login_button’) ?>

As instructed in http://wiki.developers.facebook.com/index.php/WP-FBConnect