I am working on my 4th sparkle hat now -- they're going to be fun holiday presents for friends with funky tastes!
I found large paillettes at AC Moore, although they had tiny holes in them. I wound up just punching larger holes in them (you can buy hole punches of every size imaginable at a place like AC Moore). Worked fine for me.
I have also begun adding a 4th repetition of adding paillettes (so an additional 6 rounds, total), and even a few extra straight knit rounds before switching over to the DPNs, so that it's a bit taller; that way the hat actually covers your ears (maybe I just have a big head, but here in New England we need hats to cover our ears!).