You can also make a dollhouse pretty easily. Put together a simple wooden box (or use a cardboard one), and leave the top open. Slide pieces of wood (or the box tops, if you are using a cardboard box) into the box to create room dividers. You can cut rectangles in these room dividers as well if you want doors on the room dividers.
Voila! You have a dollhouse.
The dollhouse is one that you access "through the roof" (the roof that doesn't exist) rather than through the side (the side that is sliced open), but it can be really neat.
To make dollhouse furniture, etc. use common household items (jewlery boxes for a bed, thread spool ends for coffee tables, thimbles for cups, etc.). You can make this as elaborate as you want and have time for. You can paint the walls or leave them as is. You can draw tiny pictures to go on the walls or have no pictures on the walls. You can use tiny pieces of fabric or small bits of carpet samples as rugs, or you can stick with "hardwood floors." You get the picture.
I've found some simple wooden dolls at even big, yucky corporate toy stores. Nicer items that probably weren't made by small children in sweatshops, though, will likely be in a smaller, less corporate toy store (or in the above mentioned catalogs...which are all great).
Dolls can really be made out of anything as well. We made clothespin dolls when we were kids. You can also find small doll patterns to sew at many craft and sewing stores, and often times craft stores carry items (such as wooden heads, sometimes heads you paint yourself) that serve as doll making supplies.