Dotted lines and pencil tools

I keep seeing people say that to draw a dotted line with your pencil tool that you change the spacing to 250 or something like that.

Is this something that can be done in PS 7? If so, how and where do you do it because I can't find a setting like this anywhere and I'm really starting to feel frustrated because this seems like it shouldn't be too hard, and I'm not really Photoshop challenged.

Thanks in advance :)