I know I got this idea from some family magazine, so I can't say that it is 100% original, but they were making it as a painted hand stamp (much like thanksgiving turkeys) and not a felt ornament. I picked up a few supplies (quite cheap maybe $10 and the supplies will make a TON), and got to work and this is what I came up with!

They are a little time consuming, but I love them and I love that it is a personalized ornament from my son, because it is a hand print.

Here are the supplies that you will need, along with a glue gun, a hole punch, and an iron:
-Freezer paper
-green felt (or whatever color you want for the back, you will use the most of this color)
-white felt
-red felt
-flesh color felt
-19.05mm (3/4") white pom poms
-10mm pink pom poms
-12mm wiggle eyes
---(keep in mind though that the bigger your child's hands are the bigger you will want these to be so it is proportional)
-ribbon
-puffy white fabric paint (if you want to date the back)
Basic Instructions:
1. Trace the outline of your child's hand (or yours, whatever you want)
2. clean up the outline and make a copy of it onto another piece of pape
3. Divide the 2nd handprint into 3 parts lines cutting across the palm, the top will be the hat, the middle the face, and the bottom part the beard.
You will have a hand piece, a hat, face, and beard, and I even cut out little mustaches.
4. I used freezer paper to make the patters for the ornaments, and then ironed them onto the felt to make cutting easier (make sure your iron is on a low setting otherwise you will melt the felt to your iron, and spend about 15 minutes scraping off fuzzy felt pieces that melted onto your iron... not that I did this or anything)
5. cut out all of your pieces, warm up your glue gun.
6. glue the hat, face and beard pieces onto the hand print. then glue on the eyes, mustache nose, and pom pom onto the hat.
7. let it all dry for a few minutes, then punch a hole in the top to run a ribbon through, so you can hang it up.
8. personalize the back with the puffy fabric paint

ALL DONE! If anyone else decides to make these I would LOVE to see the results. I had a lot of fun with these, but I can't wait until my son is a little older so he can have fun making these too!