This is exactly how I do it - it is instant and humane if done properly, with less room for error than whacking them.
When you pull on the tail, make sure you grab the base of the tail (near the body), as if you hold the end of the tail it will just deglove, and rather than kill the mouse you're just going to end up with a mouse in pain and bleeding. Also, when pulling the tail, you're not pulling it straight back - you want to angle it up and back slightly, at around a 45 degree angle. As you pull the tail, press down on the neck.
If you do this wrong, as with any method, you will end up causing unnecessary suffering to the animal. I practiced on defrosted mice until I was sure I had the technique down - trust me, you will know when you've done it right.