Romni Wools on Queen St. is amazing, I am there once a week. The staff is very helpful (a blessing for me!). They specialize in natural fibers, but have a nice long aisle full of novelty yarns as well. Closed Sundays :(
PS. Don't go if you're in a hurry, you'll need lots of time.
"Half our life is spent trying to find something to do with the time we have rushed through life trying to save."