So I've not thrown in the wooly towel yet, still knitting away. I just finished my nephews beanie and I'm thinking of going into business creating woolie coffee cup holders.
They go around your standard take-away coffee (and stretch to a large) cup in place of the cardboard holders. There are loops for your fingers, so no-one can knock it out of your hand on the bus anymore. That happened to me once, and I haven't gotten on the bus since. Oh the shame!
Anyway, it's a gorgeous little invention and can be girly or masculine. And it's environmentally frendly, relatively cheap and entirely original!
Get me! 
ooo, i love knitting. Made a hat over christmas with ear flaps and everything.
I'll have you know it's meant to be the new 'in' thing, very theraputic.
Try the internet for cheap yarns, but watch out for the delivery charge.