That shirt is cute! I've used felt for embellishing my guitar book/paper/carrying bag thingy... Perhaps I will post a picture...
A long time later:
Ah here we are!
*crosses fingers hoping that the picture will work*
Yup, sorry the picture is somewhat crappy...
To do this, I just sewed the bag (simple enough). I took a photo of a guitar, used PSP to outline, printed, then cut out the pieces of felt. I used the machine to sew the pieces on (mainly because I hate/suck at hand sewing) and Tada! It's not great, but it serves the purposes.