You have already accepted an answer, but I give you another option:
You can use scrlttr2 from the KOMAscript-bundle, and by by loading the letter class option file, section.lco, you will have sectioning commands. The appearance of the sections can be modified by standard komascript-commands. The .LCO also handles sections with star (\section*{Test}. section.lco gives you four levels of headings.
You can download section.lco from KOMAscript’s homepage. Put section.lco in your local-texmf, and remember to update the file database.
An MWE:
\documentclass[UKenglish]{scrlttr2}
\usepackage{babel,blindtext}
\usepackage[utf8]{inputenx}
\usepackage[T1]{fontenc}
\LoadLetterOption{sections}
\begin{document}
\begin{letter}{Name of Recipient \\ Address \\ of \\ Recipient}
\setkomavar{subject}{This is a strict formal letter}
\opening{} % eg. Hello
\section{Section one}
\blindtext
\subsection{Subsection also}
\blindtext
\section{Section two}
\blindtext
\closing{Kind regards} %eg. Regards
\end{letter}
\end{document}
newlfmdocument class does not offer a\subsectioncommand, and even the\sectioncommand is implemented in a rather rudimentay way, as\newcommand{\section}[1]{{\Large {\bfseries #1}}}. This is not surprising given that this document class is meant to be used for letters, memos, and faxes. If you absolutely must use a second-level sectioning command, you could set\newcommand{\subsection}[1]{{\large {\bfseries #1}}}. Note, though, that no provisions exist for any kind of numbering of these sectioning commands, and the spacing above and below the headers will likely be poor. – Mico Aug 05 '12 at 18:20