You can't go wrong with a scarf. I've made many, many scarves since I taught myself to knit. Try experimenting with ribbing (knit 2 purl 2), or seed stitch. Personally seed stitch (alternating between knit & purl over and over again) is a little annoying!!
I'd recommend the book Stitch n Bitch by Debbie Stoller. It was (and is) my knitting bible, although the internet is a good source too. I like the book because it'll teach you how to increase/decrease, and then provide a simple pattern to practice with. I found it easy to learn.