I, too, have a real problem with crafting in D&D 3.5. In my case it's smithing weapons. Real time versus game time has been brought up, as was the Japanese katana (the usual weapon brought up). But since I have some experience with real-world "crafting" as well as game time, it just seems totally unrealistic to me. Using tools not that different from those used in the medieval period, I can craft a forged knife in about a day's work. Following the rules in the PHB and DMG, assuming a median roll of 10 on the die with no skill modifiers (not likely, but just to be completely average), I would only barely cover the cost in silver pieces (the way you determine if you complete a piece in a week). So, yes, a basic dagger would therefore supposedly take someone a week of working on nothing else to complete. Even with no skill someone could complete a simple knife in much less time with only a little direction from someone who knew what they were doing.
Another problem I have with the crafting system is that it doesn't seem to take into account things like spears, bows, arrows, and other weapons that include a combination of metal and wood, or just wood. Just because someone is a master sword-smith doesn't mean they'd be able to pick up slabs of wood and craft a composite bow, but it's all covered under the same skill. It should also be a snap to whip up a bunch of arrowheads to give to the ranger in my party for him to affix to his existing arrow shafts, or pump out a couple spearheads for someone to tie onto a staff, but no rules exist for that.
The largest problem isn't the lack of clarifying rules for crafting, or placing them within the framework of realistic abilities, but the way that they are so difficult to work into a campaign. Most adventures consist, by definition, of being on the move. Whether it's traveling to a destination to investigate a rumor or simply being engaged in combat, the characters aren't exactly going to be able to spend enough time to build (or even borrow) a forge long enough to craft most weapons to make it worth while. Really the only way that you can use the crafting skills is if the DM will allow you the off-table game time to do it. If you'll stay in a town for a couple weeks which won't be played in-game, and your DM will allow you to make all your rolls and stuff at home (or spend lots of time with you while you do them in front of him with all the math) then it's pretty much impossible to craft up anything much more useful than a wooden spoon (DC 5, incidentally).
Crafting could be a wonderful build for a character, whether it's just as a background element or an in-game usefulness. Who wouldn't love to have access to heavily discounted and virtually unlimited scrolls, potions, or high-grade weapons and armor, delivered at lower levels than you could probably afford or find them? It seems that the idea of crafting was thrown as a bone to those who are more heavily into role-playing and long campaigns, but only as an afterthought. It's a broken system, there's no doubt about it, and it's far too confusing and time-consuming (not to mention unrealistic) for the general gamer to even bother with. Which is really a pity.
Now, for those who want to work on crafting anyway (in 3.5E), check out DMG 282-288 (creating magic and masterwork items), PHB 70-71 "Craft" for basic crafting rules and a table. A quick recap on the basics of crafting can be found at:
http://dungeons.wikia.com/wiki/SRD:Craft_Skill. I hope this helps anyone else who has questions about crafting. Ultimately you have to work with your DM when it comes to crafting, and maybe come up with some house rules to make it work easier and fit better into your gameplay.