There are two ways to knit with beads, the first and easier one is the one I'm covering here. It's beaded knitting. BagLady Press has a great discussion of the two methods here. You can also order all the supplies you need from them.
I designed and knit this bag in an evening watching tv with my daughter. A friend of mine who is an amazing knitter told me she hadn't yet tried making one of these because of the size of the needles and the time stringing the beads, I told her if I could do it, anyone could. I'm really very very bad at knitting.
It's done in simple garter stitch. This page has instructions for all the stitches you need (cast on, knit, bind off)
Size 0000 dp knitting needles, I got mine at my local beadstore.
size 8 perle cotton
hank of size 11 seed beads, a hank is important unless you have a bead spinner. I don't have one yet unfortunately.
tapestry needle with a big enough eye for the cotton
DPN (double pointed knitting needles) come in packages of 4 or 5, you'll only need 2 of them, and you can use cork on one end of each of them to keep the sharp ends from poking you.
Transferring the beads to the cotton is pretty easy, slide about an inch of beads off one strand of the hank, tie the hank strand of thread around the perle cotton, and just slide the beads down on to the cotton. This bag takes a bit under 3 strands of beads. If you are using a bead spinner, figure about 4 feet of beads. There will be some left over, but given my talent for spilling them,I always try to go a bit over.
Cast on 14 stitches, and leave a long enough tail to sew up one side later. 10 inches should be plenty. and do the first row in plain knit stitch. When you are flat knitting, if you are only using knit stitch it's called garter stitch.
The next row we start adding in the beads between stitches.
Row 2:knit 4, slip 1 bead up, knit 3, slip 1 bead up, knit 3, slip 1 bead up, knit 4.
so now it looks sort of like this
rows 3-7(5 rows): repeat row 1.
Now you've got a very short piece of fabric with 3 rows of beads on each side.
rows 8-13(6 rows): knit 4, slip 2 beads up, knit 3, slip 2 beads up, knit 3, slip 2 beads up, knit 4
rows 14-19(6 rows):knit 4, slip 3 beads up, knit 3, slip 3 beads up, knit 3, slip 3 beads up, knit 4
rows 20-25 (6 rows): knit 4, slip 4 beads up, knit 3, slip 4 beads up, knit 3, slip 4 beads up, knit 4
rows 26-33(8 rows): knit 4, slip 5 beads up, knit 3, slip 5 beads up, knit 3, slip 5 beads up, knit 4
rows 34-49 (6 rows): knit 4, slip 4 beads up, knit 3, slip 4 beads up, knit 3, slip 4 beads up, knit 4
rows 50-55 (6 rows):knit 4, slip 3 beads up, knit 3, slip 3 beads up, knit 3, slip 3 beads up, knit 4
rows 56-61 (6 rows):knit 4, slip 2 beads up, knit 3, slip 2 beads up, knit 3, slip 2 beads up, knit 4
rows 62-67 (6 rows):knit 4, slip 1 bead up, knit 3, slip 1 bead up, knit 3, slip 1 bead up, knit 4
Bind off the next row, leave enough of a tail to sew up that side. Again, about 10 inches.
Now you've got a longish slinky piece of fabric that's wider in the middle then at the ends, fold it in half so the cast on edge meets the bind off edge, and sew the sides up.
Look! A tiny bag! Now you've got to figure out what you are going to do for the strap. For the strap on this one I used SoftFlex, but you can also crochet a cord, braid a cord and sew it in, or even bead a cord using something like spiral stitch and sew it on.
Be sure to check out BellaOnline's Knitting Site for more information about knitting.
If you want to try the other sort of knitting with beads, Julia Pretl has wonderful patterns and a book I reviewed here.
Honestly, it's not really hard at all. It's the first sort of knitting I learned how to do. I'm still very slow at knitting, and making this took just under 4 hours, which means if you can actually knit but just haven't tried it with beads yet, you can probably do it in an hour and a half, if you are just learning how to knit, I still think you can probably do it quicker then I did. For some reason I knit right handed, and I'm actually lefthanded.