I knit them in the round with DPNs. I used a DK weight yarn and a size 6 needle and cast on 24 stitches for a (small) 12 month old baby. I'd recommend binding off with a larger needle, since the CO and BO edges are pretty snug.
Inspired by a friend who did the same, I whipped up these lil' leg warmers for my little one to eliminate the gap between her socks and her pant legs that forms when she sits in the stroller. Very easy, just plain old K2, P2 rib.
There's a cool pirate sweater in Zoe Mellor's Adorable Knits For Tots as well, which I'm planning to do in black and hot pink for my little one. It's not nearly as rock 'n' roll as yours though -- in the book, the skull is smiling. Smiling!
When I made this tote a couple years ago (it was my first felting project) I found that the handles totally needed to be felted again. The shape was a little weird, plus they got a little stretched out and droopy because I went for a pretty light felting the first time around. Now they're great and I'm still using the tote to store my knitting in.