Creating Libraries from sketches?

Don't be fooled by the suggested method name. The point is, hardware initialization (i.e. pinMode(), etc.) should not be done inside the constructor, but in a separate method, that client code can call when appropriate, e.g. inside setup().
You could call this method begin(), hwInit() or whatever name you judge appropriate. I think begin() is a good suggestion because it would make your code consistent with other libraries, like Serial.