*THE* book is Wee Felt Folk by Salley Mavor. I don't have it, it is available on Amazon or at her website,
Wee Folk Studio . I don't have it though, I ordered through my library months ago and am trying to wait patiently. I have put it in my cart a million times at Amazon!
I used directions I found at Amitymama.com. They have a wonderful archive area with craft/sew alongs that give you all the information you need. Search the craft forum for more ideas too. I think you have to register to see pictures, and the pictures make the difference.
HTH, have fun, and post pictures!! If you have any more questions, I am going to be making more soon and maybe I can take some pictures for you.