When I was young everyone was knitting this kind of dolls. They were VERY popular, especially knit as a sailor; with blue pants and striped shirt and fluffy beard.
You start with toes-up sock pattern and knit as sock foot. That will be the legs, the body and face, so change colors as proceed :-) For example, the gnome doll in the middle has about 10 layers white, 10 red for pants, 20 green for the shirt and 15 for face.
Then starts the decreases for the top of the head, or hat, if you want to have a hat. The easiest is of course to just bind off the top of the head and then just shir (gather) it closed after filling the doll. If you finish it with a nice decreases, you have to fill the doll before you close the top of the head...
After that, you will mark the legs and arms by sewing, and you will "strangle" the doll, and mark the neck - shir (gather) the neck and then bind the ends of the yarn a couple of times hard around the neck to make it clearer. (I am going to post a picture, when Blogger agrees to co-operate with me ;-))
Then you decorate the doll by embroidering eyes and mouth, by adding hair and beard, by adding belt buckles, shoelaces, glasses, jewelry and anything you like.
The girls have skirts. There are several ways of doing this. Either you knit the skirt separately and sew it on the doll, or you pick up stitches from the dolls waist and knit the skirt afterwards, or you knit one round at the waist with double yarn, and separate the double stitches to two layers... Or which ever way you want.
Other easy crafts of this kind:
yarn dolls : angel, jack frost (snowman), santa I, santa II, yarn doll
roly poly dolls: clown, santa, angel and snowman at Free Patterns.com. It's a bit difficult to find patterns there, one cannot link straight to patterns, so go to Crochet; Special Occasions and there choose Christmas. I think they are on the second page.
finger puppets: Tubby Finger Puppets, Dear Friends Finger Puppets, Finger Puppets, Frog Finger Puppet, Pig Finger Puppet, Pocket Monster Finger Puppet
