That's one way to do it.
I've never used the type of perfboard which has copper pads; I just use regular unclad board, stick the components in one side, then use my own perverted version of wire-wrap on the other side. I use telephone wire (small gauge solid insulated wire), wrap it around the component lead and solder it. I find I can make most connections without even using wire: simply wrapping one component lead around another.
This even works well with IC pins, provided you're careful soldering and don't let it get overheated. It's a little more work, but the results are neat and functional.
Regarding having boards etched: forget about it, unless you're planning on going into production. In which case, don't try to DIY it. There are board houses that can make much better boards than you can for relatively cheap.
The only time you really need a real etched PCB is with RF (high-frequency) circuits. Or if you're going to use surface-mount components. Or if you need more than a single-sided board.