How far are you wanting to tow? Many vehicles have different safe distances you can tow them using different methods.
When it comes to towing my truck I just leave the transfer case in 2-hi and put the tranny in neutral with the hubs unlocked. Putting the transfer case in neutral actually disengages the transmission from the driveline, but locks the front and rear outputs on the transfer case together.
The gear driven Toyota 'cases are tough, but there is just no way to truly twin stick them because they don't have a real neutral.
The preferred method for towing over greater distances for my truck is to pull the rear driveshaft as was mentioned before. I have it really easy because I have flanged yokes so I don't even have to worry about losing u-joint caps.
Someday I will be able to afford the full floater conversion kit for my axle. Then I'll have locking hubs front and rear making flat towing REALLY easy.
As long as we're talking about toads, does anyone know anything about what Honda thinks of you flat towing their cars? I bought a 1989 Honda Civic hatch for $200 in the fall. It is the most base model you could get. D15B1 (the restrictor plate model 1.5 DOHC at 70 hp), 4 speed manual tranny, and no passenger side mirror even! The thing has 272,000 miles on it, but I'll be damned if it doesn't still run great. Can I flat tow it in neutral for shorter trips? I know Toyotas, not Hondas.