Ok everyone I want to make my favorite cousin something handknitted from me. I was talking to her because I want to make her something she would use because knitting is time consuming. She told me she could really use a bag for when she goes to the movies with her friends (She is 13 years old now) and She likes the colors hot pink and black together. She doesn’t want a big bag, just big enough to hold her camera, Ipod, some money, and cell phone. We were thinking something about 7 by7 inches. We were also thinking of felting it?? 
If any one has any yarn suggestions for felting or any ideas?? It would be appreciated
Need some Ideas
I just finished this bag and it came out really cute!
http://www.knittinghelp.com/knitting/forum/viewtopic.php?t=10268
It would be super simple to just knit a very large rectangle and sew it up the sides. Leave one part for a flap.
For example: knit a rectangle 7 1/2 X 10 1/2 inches. The half inch is for a seam allowance. Divide the long side so that you have a square 7 x 7 inches with a flap 3 1/3 inches to fold over. You could use a snap, or button to close the bag.
If you make it to size I suggest lining it. Nothing will fall through the knitting and the lining will help take the strain off the stitches. You could either knit a strap or buy some satin ording to finish it off.
You might even consider sewing some pre-made beaded fringe for the bottom.
I might consider using a chenille for the wow factor. Or how about using 2 novelties like eyelash and boucle held together. Make the larger yarn black and the smaller pink. Or vice versa.
Cute Felted Tote
http://cache.lionbrand.com/patterns/40647.html?noImages=0
Furry Beginner Tote that is 7 x 7
http://cache.lionbrand.com/patterns/kff-funBag.html?noImages=0
Flowered Bag 9 x 8
http://cache.lionbrand.com/patterns/kms-floweredPurse.html
Colorful Bag 10 x 10
http://cache.lionbrand.com/patterns/kms-rainbowBag.html?noImages=0
Cute, Beaded Bag
http://wendysweewoolies.com/TOTM/Beaded_%20Bag_pattern.html
Lacy Bags
http://mary4169.tripod.com/Lacey_Bags.pdf
Metallic Bag
http://knitty.com/ISSUEwinter04/PATTtinsel.html
Sock Yarn Bag with Beads
http://www.soxie.com/knittedbag.html
Beaded Felted Bag 9 x 8
http://www.stitchniche.com/spring_sunrise_beaded_felt_bag.htm
Suede Bag 9 x 8
http://knitty.com/ISSUEspring04/PATTsueet.html
Textured Bag 8 1/2 x 6
http://www.moonarts.com/blog/free_patterns/pages/via-mala-purse-print.htm
Keyboard Purse - not sure how big it is