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.