Here is my knitting needle case that I made using the instructions in my Stitch n Bitch, except that I changed them somewhat. I used a regular cotton, rather than upholstery fabric, and I added an extra layer of pockets to hold more needles. It works really well, I don’t have to go hunting through piles of stuff for needles when I start a new project and they are organized by size. It was quite easy to make, except that sewing the lines for the pockets was a bit time-consuming and they didn’t end up perfectly straight (of course, given that it was me sewing it, is that really surprising?)
Knitting Needle Case
Knitting Needle Case open

I also admire these circular knitting needle cases at Textile Fetish. Might have to get me one of those to deal with the tangled pile of circulars at the bottom of my knitting basket.