While my niece was visiting us I was thrilled to see her still wearing the red gnome hat I made a couple years ago from a recycled felted sweater. The pattern came from this book: Bend-the-Rules-Sewing by the talented Amy Karol. I really love every pattern in this book and keep pulling it out when there is a birthday party or baby shower that requires a gift.
Gnome hats makes for some cute pictures too!