ok, so I feel like a really bad person. I was in the Coffee and Tea round two swap, and I made this, but when I was done, I loved it too much to send away, and I didn't have time to make another one.
I used the Hot Head pattern from Stitch N' Bitch for a base. Though, I think any bulky hat pattern where you knit in the round will work. I used worsted weight yarn and size 8 needles. I just cast on 48 stitches, knitted until I liked the height of it, and did the decreases they had in the book (though, since the hat in the pattern was ribbed I changed all the purls to knits.)
Row 1: * K2tog, k2; rep from * to end
Row 2: * K2tog, k1; rep from * to end
Row 3 and 4: knit
Row 5: * K2tog; rep from * to end
Row 6: * K2tog; rep from * to end
pull the end for the yarn through the loops, tie off and weave in
for the handle I cast on 8 stitches in the round and knitted a tube that I concidered long enough (about 6 inches) and bound off, leaving yarn on both ends for sewing
for the coffee itself, I cast on three stitches, and knitted increasing on both ends til it was wide enough for the top of the cup, then decreased on both ends 'til I was back to three. Then I stuffed it and sewed it up.
p.s. I made my partner a coffee bean bracelet, a tote bag, two mugs with a knitted cozy, some candy and a little box in her fav color with glazed coffee beans in the lid http://www.craftster.org/forum/index.php?topic=84750.30