I think the Target yarn is great! I bought a ton of the dk and furry stuff. (Besides, no one would know whether the yarn you used was $1 or $10.)
However, the needles are crap. They are all rough and warped and prone to snap. Chopsticks would be better!! A friend and I could see a bunch of new knitters starting with these needles, getting frustrated and giving up. That's a sad picture.
I HIGHLY suggest you go to a normal craft store or yarn store and purchase a straight pair of size 7 or 8 (for the regular yarn) or 10 (for the funky stuff) for around $5 or $6. They will be worth the investment. Plus, if you really get into it, you'll start building a relationship with the people at the LYS (local yarn store) for their help and expertise.