Just to add to what Stiney said about web design, make sure that your website works in multiple browsers and try to stay away from scripts and code that are browser specific. One thing that would keep me from returning to any online shop is if their site was broken in my web browser because they used IE only scripts that don’t work in Firefox or any other web browser that is not IE.
[B]
*What are you guys looking for in a yarn shop?
[/B]A good selection of yarn, things that you wouldn’t find in other yarn stores, a good selection of needles, etc.
*What do you like, what dont you like about online stores?
I don’t buy yarn online because I can’t pick it up and touch it. Sometimes when yarn is photographed, the same color looks different when you actually hold the yarn in your hand and look at it than from the picture online (either how it’s photographed or due to the settings on the computer monitor of the person looking at the picture). I don’t want to end up with a color that is different than what I thought I was getting.
The other reason why I don’t generally buy yarn online is that I have a very good LYS in my town and I like to support them with my money. This is something I feel strongly about, especially after reading some of the bad experiences other people have had at their LYS’s.
What might tempt me to shop online for yarn is if an online yarn store carried something that my LYS did not carry.
A general reason why I like online stores is that I can shop for things at 3 in the morning while sitting in my underwear and I don’t have to stand in line at the checkout and I don’t have to find parking.
*What kinds of yarn are you looking for (brand, type, wieght,etc)?
Some of the brands that are a bit more hard to find. Lion Brand Wool-Ease worsted is rather hard to find. One store near me carries it, but they’re carrying less and less of Lion Brand in general. They’re cheaper than the Lion Brand website. When I need to use an acrylic yarn, Wool Ease is the one I like the best.
*What other kinds of things (patterns, needles, etc.) would you like?
Needles, especially bamboo needles and needles in oddball sizes that are hard to find.
*Any shipping idea’s?
The best shipping for the least amount of money is good. The ability to track my order is also good. 
*Do you have any other suggestions?
Maybe offer some knitting and crochet books for sale, too?
Something else that would be cool is if the customers could write reviews of the yarn so other people could use another person’s experience with the product (i.e. how it knits up, does it split, how does the knitted fabric drape, etc.) to decide if they want to use it for what project they have in mind or if they should try something else.
Good luck with your endeavor and I hope it works out for you.