Mailgirl! you've GOT to go to Suss down on Lafayette (Soho). It really is extraordinary... esp to see all the designs she has hanging on her racks.
That's just the most outrageous store, beautifully decorated and her own fantastic yarns. I just got more last week.
Personally (uhoh) I wouldn't recommend that place on 14th street. Had some bad experiences there. The Yarn Co I was in last week also and while they have a nice selection, you won't find a bargain. They do have Manos del Uruguary for $12.50 though while other places (like on 14th St) charge $14 or $15. Knitty City is really nice (closed Tues).
If you want an ADVENTURE go down to Seaport Yarns. What a whacko place. Former office and room after room stuffed with yarns, books, sale bins. A very strange place....very knowledgeable owner.
Purl in Soho is a sweet little place too (good pizza places nearby).
The Point is ok esp if you want a cappucino.