I found a website that makes little cupcakes from old sweaters.  The
instructions are here:

http://www.instructables.com/id/EPZAPJVLVJEWZMIJWJ/

I also found a pincushion that is knitted in garter stitch.  It
doesn't look exactly like a pincushion, but you might be able to fudge
the pattern and cook up your own variation.  (grin)

http://people.delphiforums.com/knit_chat/fingerpuppets/pincushion.htm

I knitted one for my pillow, and it doesn't look like a cupcake, but
holds my crochet hook and pin lifter very nicely.

Good luck!

Lenore

http://tatt3r-lace.blogspot.com

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