Felting is an AMAZINGLY fun activity. I'm a knitter, so I usually create a project from scratch, knit VERY oversized, and then felted down in hot water to my required dimensions. BUT, there is a wonderful shortcut I have found...
Investigate your local Goodwill, Salvation Army or other charity re-sale shop. Hit the sweater racks, and look for 100% wool sweaters. Especially in the Men's section. BIG wool sweaters = More potential felted fabric.
Look for Pullover sweaters that are in excellent shape (no nubs!), and can be cut apart into "yardage". Cardigans are ok, but since there are 2 front pieces, you have less to work with than with a pullover. If it's too much work to pull them apart at the seams, then cut right up the edge of the seams to make the largest pieces possible. Sleeves are great if you are making slippers and need smaller pieces.
I have used DOZENS of bargain sweaters, mixing together the cut-up pieces for patchwork bags. There is NO limit to what you can do.
Felted wool is dense and heavy, so you need to either be able to hand-sew the pieces securely, or have a sewing machine that can handle thick pieces. This is SUCH a fun activity with wool.
If you enjoy yarn crafts, it is fun and easy to dye your own wool yarn.
Unsweetened powdered drink mixes make great dyes for yarn. You can make some fun effects by using multiple colors. The process is simple and can be done in your kitchen. Make sure you use a wool yarn, as cotton and many synthetics will not take this dye.
Use a light colored yarn so you can see the new colors.
Make sure you get an unsweetened mix, the kind you would add sugar to to make a drink. The brand is not really important, store brands work as well as the national brands. For each ounce of yarn get at least one packet of mix, more if you want darker colors. You can combine mixes as well to make a wide variety of colors.
Gently wash your yarn in tepid water with a couple drops of dish soap added. Let it soak a few minutes to get thoroughly wet. Put some water in a bowl, add the drink mix, and then add the yarn. If the yarn doesn't start to take up the dye right away try adding a little vinegar.
When you're happy with the yarn color, drain most of the water and put the yarn in the microwave. Heat in on high for about 2 minutes (until it's quite hot), then let it rest for a few minutes and nuke it again. Squeeze out the excess water and lay the yarn out on a towel to dry. Now have fun with your beautiful yarn!
Thanks for the detailed instructions on yarn dyeing. I've always wanted to try this with wool roving for felting (if only there was more time in the day!). I always buy pre-dyed wool, but I think it would be fun to dye my own, plus it would give limitless color options.