JUnit test classes can be generated automatically using the Eclipse plugin attached.
Get Fast code plugin from http://fast-code.sourceforge.net/
Drop the plugin in to the plugins folder of your eclipse. Restart the Eclipse.
A new option called fast code should be added in the tool bar.
In Eclipse go to Windows -> preferences -> fast code preferences.
Select the Junit preferences page option. Retain the default values and select the "Test Location" from the drop down.
The drop down gets populated from the "sources" tab of the “Java build path” of Eclipse.
If you are working on creating the GUI test classes the drop down should have "${project}/GUI/Test".
Similarly when you are creating test classes for service the drop down values has to change.
The same package structure of the source file is retained in the test class.
The Fast code creates a skeleton Junit test class for the source file.
For more information on Fast code : http://fast-code.sourceforge.net/documentation.htm