Oh, i just knit a tube on circular needles, until it was about 3-4 inches long, then i took an hair elastic, pinned it to a point somewhere halfway down, and I seamed it up around it. Does that make sense?
...Wrap yarn around hair-tie as many times as possible (came to around 80). Knit into each "stitch" twice. Next round, knit every other stitch, and knit twice into every other stitch. Bind off. Voila.
I guess that would be easier, half the work, you know, because in my method it ended up double layered. And no finishing required.