Take a look at this article and follow the last bit (copy the Atomic Template and gut it, then add your own stuff)
http://docs.joomla.org/Upgrading_a_Joomla_1.5_template_to_Joomla_1.6
These are the changes to be made:
1. Copy the entire /templates/atomic folder to a new folder in the /templates directory. Rename this new folder. For instance, you might call it mysitename-atomic to designate it as the custom template for this site and adding the reminder that it was derived from the atomic template.
2. In the new template's index.php file, add your header-specific information for styles from your version 1.5 template and javascript, module positions etc. into the <head> and remove all the other stuff that's not needed.
3. In the new template's index.php file, delete everything between the <body> </body> tags. Copy and paste everything within the <body> </body> tags from your version 1.5 template to the body of the new template's index.php file.
4. Replace the CSS file with yours and make sure that you've referenced it in the index.php file in Step 2.
5. Update the templateDetails.xml file in the revised template.
5.1. Add the new doctype bit, and notice how we've changed from <install> to <extension>
<?xml version="1.0" encoding="utf-8"?>
<!DOCTYPE install PUBLIC "-//Joomla! 2.5//DTD template 1.0//EN" "http://www.joomla.org/xml/dtd/1.6/template-install.dtd">
<extension version="2.5" type="template" client="site">
<!DOCTYPE install PUBLIC "-//Joomla! 2.5//DTD template 1.0//EN" "http://www.joomla.org/xml/dtd/1.6/template-install.dtd">
<extension version="2.5" type="template" client="site">
5.2. Change the <name> entry to match the name of the template folder. It is case-sensitive. If the folder is /templates/mysitename-atomic, the entry in the templateDetails.xml file will be:
<name>mysitename-atomic</name>.
5.3. Replace the <positions> section of the file so that they match the positions used in the index.php file.
5.4. Change the other elements as necessary. For instance, you might want to modify the creation date and version number.
5.5. Delete images in the /template/image file and add your images. If you keep the images folder, make sure there's something in it like the default index.html file. If not, when you try to install the template from a zip file you'll create, it'll complain with an installation error because of a missing file.
6. Zip up your folder and use the Extensions manager to upload it. If you navigate to the Template Manager now, it'll appear under Styles (for selection) and Templates (well... I don't know what that's about yet!)
I tried to just add the folders into the templates directory as I've always done in Joomla! 1.5 but nothing appeared under the Template Manager. So after Googling I found out that I could go to Extensions > Extension Manager > Discover and then click the Discover icon. There I found my templates, but after selecting one of them and clicking Install, I was told that it had already been installed. The other one just went to a blank page. Looking back at my Templates Manager I found all of them under Templates, but not under Styles (so I couldn't do anything with them). That's when I Googled some more and found that people were zipping up their template files and uploading them via the Extensions Manager > Install.
Good luck people! :)
