Before we went on our most recent trip, I finished a felted purse. The pattern is in the fall 2008 issue of Interweave Knits, and as soon as I saw it, I had to try it. (The designer, Sharon Dreifuss,lives in Chicago and has her own blog.) Here is the way it looked before the trip to the washing machine for felting.
And here is the felted version. I was quite intriqued with the way felting softened the look of the embroidery and can see a few more of these little purses in my knitting future! This is a fun pattern with endless embellishing potential.