Update: I recently finished a new knit toy--an adorable cat! I love that it looks like a totoro. As with my other knit toys, I used a pattern from Knitted Toy Tales. I used black, white and gray yarn since I read that babies are attracted to black and white toys. The cat's green eyes are based on a recommendation from the book, and I love how they turned out.
I recently found a book called Knitted Toy Tales in Half Price Books, and I've had a great time knitting some of the toys from the book. I've found the patterns easy to follow, and the results are adorable.
For anyone who enjoys knitting and would like to try making their own knitted toys, I'd strongly recommend these patterns. So far I've made the elephant and the frog, and I'm planning on making several more. I'll post updates as I finish more toys!