Check out this web page and their is a cute hat there called
shar pai hat, love how that is done and would like to try and make it. They also have a scarf too. www.tahajo.com can't seem to figure out this stitch.
As for the hat, looks to be just reg stockinette but the yarn, based on how it's plied and/or twisted, may be causing it to look more like |/ than the traditional \/. The hat it worked long and allowed to slouch.
I found it! It's called a Pucker Stitch. Here's what the books says to do:
Cast on 40 sts (don't forget the book is just creating a swatch; you can cast on as many sts as you want/need).
Row 1: Knit
Row 2: Purl. Repeat rows 1 & 2 (St St) for 23 rows total.
Row 24: P3, reach down 10 rows and pick up stitch bump for 4th st in that row and place on left needle, purl together that stitch bump and the next st on your needle (pucker st made); repeat over next 17 sts; purl remaining sts in row..
Row 25-47: Work St St.
Row 48: Purl 20 sts, do pucker sts in next 18 sts, purl remaining sts in row.
Repeat Rows 1-48 as needed.
The picture in the book shows very straight and even puckers, while the hat in your link shows them very NOT straight, rather meandering. I haven't tried this yet, but I'll bet you get that result by working the pucker sts at different levels in each section. For example, in your first set of pucker sts, work the first 2-3 sts 10 rows down, then move down another row and do 3-4 sts, move up 3 rows and do a few more, etc. before resuming your St st. You'd have to experiment, but I'll bet that's how it's done!
Hope that helps! Post some pics if you get a chance! I'd sure like to see how you do if you decide to go ahead!