Instuctions for making it can be found here: http://www.cozylittlecave.com/2009/12/diy-pom-pom-wreath.html.
This wreath is also really cute. And it would be very cheap, fast, and easy to make. I would replace the flowers with some cute buttons or large pompoms. (The other kind, not the kind on the wreath above.)
Instructions on making this wreath can be found here http://calebdanielle.blogspot.com/2010/10/diy-yarn-wreath-with-felt-flowers.html.