Okay, so this is actually crochet, but it is so cute and I really want to show it off! Also, Amy Gaines (the designer) has two other cupcake purse patterns that are knitted (and I plan to make those too). Please see her patterns at: http://www.etsy.com/shop/AmyGaines
I can't say enough wonderful things about Amy! I really like her designs and found her pattern instructions easy to follow. I have very limited crochet skills/experience, and I was able to finish this project in one day.
My cupcake purse is about 4" across the bottom, and approx. 7" tall. I think my purse may be a little larger than the pattern pic, but I used a 4.25 mm hook (the pattern called for a 4.00) because that is what I already had. The only other changes I made were to finish off the last row with a round of SC, and I chose to leave the beads off of the ties since this will go to a very young little girl.
I used Baby Bee Hushabye Solid in #40 Boo Pink, and #80 Chocolate. This pattern was SO much fun and I plan to make more little cupcake purses in the future.