Ingrid, I still don't understand what it means to have one color "on top of" the other although I have read numerous sources that say this. does that mean the background color is in front of (closer to my needles than) the other color, which would be behind it? I have knit several small fair isle items and still haven't figured it out!! I have learned that I am supposed to hold the background color in my right hand, but I still am not sure why!
Cheley, if you want an easy first project try the easy fair isle hat on kinttingpatterncentral.com. It doesn't have much actual fair isle in it and is pretty cute, so if you are worried about biting off more than you can chew, start with that. You will soon find it is not that complicated and want more challenging projects! The fair isle hat on the same site looks complicated but really isn't very hard. I would use dk weight yarn and size 4 needles instead of what they recommend.
Also, look at the video on the philosopher wool web site: http://www.philosopherswool.com/Pages/Streamingvideo.htm
it really helped me learn how to weave in the other strand!