You don't have to make a playlist and you cant drag songs. I was disappointed until I found a way to do it. But this is what you have to do: goto the iPhone's music tab, check the box that says sync only checked songs. Then goto your music library, select all (control+A), right click, select uncheck all. Then select the songs or albums you want and right click, then check all. sync your iPhone, Thats it.
But remember if you have an iPod, goto into the iPod music tab and uncheck the box that says sync only checked song.