I've really been enjoying working with felt in my embroidery projects. It's fun, looks cute and it's quick!
I thought I'd share my process for creating a felt hoop with you all!
Here's the finished product...

I start my felt hoops by
sketching out the design I want to make. Google image search is great for finding clip art outlines to use as a starting point for the sketch.

Then I
trace each of the individual pieces of the sketch onto trace paper. You can see in this pic that I've broken apart each piece (ear, leg, body,etc) of the little ellie.

Next, I
cut out the traced pieces along with the felt piece. When it comes to felt, I like to use wool "fancy" felt. I buy mine from this lovely Etsy shop...
http://www.etsy.com/shop/giantdwarf?ref=seller_info.

Then I
put all the pieces back together again and place them on the fabric I've selected. I like putting the hoop on at this time so I make sure the design fits well within it.
I use a fabric glue stick to attach all of the felt pieces. This keeps all the tiny bits from slipping or falling off when you start stitching.

Now it's time to
stitch! I use 2 strands of DMC and a whip stitch around the outside of each felt piece. I go up through the fabric and then down through the felt. This keeps the felt fuzz to a minimum.
Once you've got everything tacked down, you can
embellish the design with additional stitches, buttons, stamps or whatever!

Now, all that's left to do is
sit back and enjoy your new hoop framed embroidery!
I hope someone finds this useful! Let me know if there are any questions!