I used the mini-skein of Inca Alpaca that Cascade sent me. Rather than seaming it up as suggested, I pinched the bottom section a bit, making a little "T," like so
Sewing it this way resulted in a bit of a gusset so that the bag can stand up on its own.
Crafting the contents was just as fun. The needles are toothpicks with pearl beads glued on the ends, and the book is a small photocopy of one of my reference books. The skeins are made of whatever yarn scraps were in my knitting bag, wrapped up in a bit of paper cut from yarn labels. The purple yarn is actually some Cascade, but I used the label from the CEY mini-skein, and the green yarn is in its own Blue Sky Alpacas label.
Details are on Ravelry.