A lace needle can be any size, they just have pointier tips is all. So you can use any needle size, usually one that's about 3-4 sizes larger than you would use to knit in stockinette with. Yarn can also be any weight, from crochet thread to fingering weight to worsted, it just depends if you want to use it for an actual doily or for a blanket or shawl. These are shown in thread, but I know Stor Rund Dug has been knit in yarn.
sue- knitting heretic