I use this method all the time not only for patches but for new instance installs as well.
Another tip: Instead of /extract you can just use /x
Tip 2: If you don't specify a target directory for the extraction you will get a GUI prompt and you can browse to where you want to store the files. If the final directory doesn't exist, just type it in.
As I said before I do this for new installs as well. I extract my Service Pack and Cumulative Updates with this method. Then I run the SQL server setup from command line with the options /PCU="<path to service pack extracted files>" /CU="<path to cumulative update extracted files>"
Who needs to bother with slipstreaming a setup. Just do that and your brand new install will be patched up when done. So easy, so much time saved.
Hope this added tip helps!