What a fun idea!
I have a free pattern for a little angel (about 2" - 3" high depending on the yarn/needle size you use) that can stand up on it's own if stuff the bottoms with poly pellets or put a washer in the bottom, and then can be hung on a tree.
I also saw someone here who knit a bunch of tiny sweaters.
You could do a snowman easily! Just do a small tube in the round and run a thread and draw it up where each new snowball would start! Jean Greenhowe has a cute little snowman with top hat in one of her books. If interested I can find out which one. Her Christmas book has several cute things like a small nutcracker and such. You can see it a frugalhause