The Arduino Bag is a fun introduction to wearable computing. Even if you don't knit, it's a great accessory for when you are heading off to your local makerspace or Maker Faire.
The basic components and the pattern are found in Knitty Magazine. The improvements I made are a better circuit layout (with no wires crossing, it is less susceptable to short circuits), and software to use the new layout.
An Arduino Lilypad processor, and a computer to use to program it (with cable).
Conductive thread, for sewing.
15 (or so) LEDs for LilyPad, a switch, and a battery-holder.