My plan is to do a tutorial of the process step by step over the next few months, but before we get started, here is a list of materials I regularly use. You can do this with very little investment, but, as always, certain tools will enhance the experience.
Sweaters - 100% wool, start with sweaters of the same weight and thickness, 5-8 sweaters with colors that will make for a beautiful design. Neutrals can play the foil for brighter colors - gray is particularly good for this purpose and it is easier to find grays that will color match. What about blends? Look at the labels closely and avoid blends, they just don't shrink as well. Start in the men's department of your local thrift shop and look for XXLs. Merino wool shrinks down well, but don't start with the really fine merino unless you want an extremely lightweight blanket. Choose colors you love.
D-fuzz-it - very important as after washing loads of sweaters you will see that they collect fiber from each other; some sweaters will pill also. The gadget I use is terrific. However, I didn't know it existed initially and used scotch tape to clean up the sweaters.
Soap - a small amount for each batch you wash. You can use your laundry soap, but I've invested in Eucalan which is especially formulated for wool fibers. You can buy it online but again, first time around regular laundry detergent will work.
Iron and pressing cloth - linen works well but cotton is fine. You will be pressing pieces frequently so you want a steam iron on the wool setting nearby. The pressing cloth keeps the wool from getting shiny.
Scissors for cutting the sweaters up initially - good ones if you plan to take this up as a hobby.
Rotary Cutter - the larger size 60 really makes a difference when cutting through some of the thicker sweaters. Again, you can use scissors, but the rotary cutter really speeds things along.
Straight edge and quilting templates - I rifled a large metal t-square from my husbands workshop and it really helps keep things square. The quilting templates just make it all easier IF you like the shapes, and they are easier for easier for beginners.
Cutting surface - the self-healing mats are great but I've been working on a large luan-veneered table for 2 years. I'm about ready to invest in a custom mat though as the veneer is finally starting to break up.
Thread - an important design element, it can really pull it all together. Cotton works for me but I have occasionally used polyester. Buy two spools as you will go through alot of thread with the zigzag stitch. Likewise, I usually fill two bobbins at a time so I don' have to stop too often to refill them.
Sewing Machine - you need a good zigzag so that the seams hold well. That doesn't mean an expensive machine, just a good solid zigzag. The stitch I use double dips the needle on each side which really keeps the seams tight. My machine is an old White I found at a thrift store and runs like a dream. Not fancy, but has a strong motor and the stitch I need.
While you gather your supplies I'll start working on our first lesson.
Here we go! It sewed up rather quickly I'm happy to say. Has a lively active feeling. The wools are both ribbed and flat, merino and lambswool. The size is roughly 42 x 53 inches - just right to wrap yourself in. 
Would that give it some texture from the seams and the color blocking I was looking for? I opted for the larger squares and fewer colors and began sewing. Next problem; one of the colors didn't have enough material to get the number of squares I needed. Here's where the fun begins because you have to come up with ways to make it work with the materials you have. So, I decided to create a new square, a black and white one that I would sew from other scraps and punctuate the blanket with 3 or 4 of these. They would create some energy and fill in where I was lacking material.
Sewing Machine - you need a good zigzag so that the seams hold well. That doesn't mean an expensive machine, just a good solid zigzag. The stitch I use double dips the needle on each side which really keeps the seams tight. My machine is an old White I found at a thrift store and runs like a dream. Not fancy, but has a strong motor and the stitch I need. 
The Cooper-Hewitt, National Design Museum in New York just finished an exquisite exhibit "Fashioning Felt' and you can view some of the work here. Spend a little time on the site and you will see how traditional felting has been done in the fields of Mongolia as well as the creation of a stunning Palace Yurt by Janice Arnold. Felt has a huge range of applications, fashion, industrial, architectural it's just fantastic. I so wanted to see this exhibit but it wasn't to be. BUT, Martha Stewart did a segment on the exhibit which you can see here. The felting process is explained as well as the production process for the Palace Yurt. Also, the exhibition catalog is available from Amazon.com and looks like it's on sale now. Enjoy! 
I had done something earlier in the year using red, black, grey and ivory and used a similar design for this one. It took forever though before I could start sewing as the sweaters had shrunk to be so small that I had to really think through how to cut them and not waste anything. What you can't see in the pictures is that the pumpkin sections aren't one big piece but three or four pieces sewn together. However, it's very symmetrical. Sometimes I cut pieces up then resewed them together just so it would have matching seams in the pattern. Click on the picture and you'll see how many seams are really in the pumpkin section. The blue accents came from a great sweater a friend of mine gave me - loved the color but I only had one sweater and it was very tiny so it could only be used for accents. I've saved every bit of scrap because the color is so beautiful. That's one of the challenges - you have to work with what is available. If you like doing jigsaw puzzles this might appeal to you also.
