Here's a fun project I found one day while checking out other blogs:
Done by using the blanket stitch, (which I'd say I need to practice a bit more). They're tiny, less than 2 inches so they work up fast. The directions call for felt or wool, and really, that's the best.
I tried using some of my cotton scraps and they're okay but not as smooth as felt or wool. If you want to make your own, here is the link.