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One of my favorite one-stop fiber places is Halcyon Yarns. Excellent customer service and a very good selection for the basics at reasonable prices (especially on cones).

If you want fiber for felting, try this link:

If you wanted yarns for fulling (I *know* I saw a pattern for a knitted ball somewhere, and I think it was fulled somehow...), try Harrisville Highland. The best price is on the cone, but uh... since you're making toys, you might not need so much.

Or, some of the better known 100% wool yarns - Lamb's Pride, BaabaJoes, Cascade 220 - all full quite nicely. Any good yarn shop would probably have at least one of those.
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