Last year I waited too long to harvest my basil to save for the winter, so this year I wanted to nip it in the bud (as it were) and get a head start.
A good time to harvest basil is when the bottom leaves start turning yellowish (as shown in the picture). When that happens, it won't be long until the basil stops producing leaves, followed by the leaves falling off (and they're not very good).
Blend it with some olive oil. You want it to feel like a slightly damp sponge. Does that make sense?