Crafters have been making ornaments out of felt since felt was invented. I remember making a Christmas pudding one and a Christmas stocking one when I was a small Mage, many moons ago (I still have them, and they get trotted out every year for the tree.)
Melissa, of Tilly’s Hangout, makes far better ones than I could, though!
The Luigi and Petey seen here are my favourites, but Melissa also makes a snazzy Fire Flower. They also come as keyrings. You can buy all these and more in her Etsy store!