I hope all you hip craftsters have heard of freecycle. I joined in Arlington, Va. and posted that I wanted knitting supplies - needles and yarn. I thought it was a long shot but worth a try.
I heard from 3 people who gave me books, yarn, and needles. One elderly lady who used to work in a yarn store but can't knit anymore due to health problems gave me about 15 sets of needles, and filled my car trunk full of yarn -- literally! I am swimming in yarn now!
She also gave me some neat vintage pattern books. I helped her organize her craft room a bit but it was essentially free.
So all you knitters on a budget, I would definitely recommend joining freecycle: http://www.freecycle.org/