These are a bit tricky to make, and so are for the older kids in the house. They are nice, however, because they are made from Styrofoam balls and so are unbreakable, so are great if you still have very young ones who like to take things off the tree.
I used these handy ornament hangers which just get pressed into the Styrofoam balls, but you could use a regular ornament hook and bend it to make a loop, pressing the ends into the ball.
Cover the top half of the ball with glue, making sure to glue around the hook. We used glitter glue, which didn't stick quite as well as regular glue, but left bits of sparkly glitter where there were any gaps in the yarn, which was quite nice.
Wrap the yarn around the ball in a circular pattern, beginning at the hook. Continue until you reach the half-way point where the glue stops. Next, flip it upside down and holding the hook, and cover the rest of the ball with glue, and continue wrapping. When you get near the end, cut your yarn leaving a little tail, and then poke the tail straight down into the glue so that end of yarn is secure.
source: My Sparkle
James came up with this idea. He just torn small pieces from leftover Christmas catalogs and glued them to a Styrofoam ball. Simple and sweet.