Here's a tutorial for a simple little holiday ornament that I created to take care of this problem. They're easy, inexpensive, and you can assembly-line them super-fast! Plus, they're sewing-themed which, well, seems appropriate.
Enjoy and Happy Stitching!
Wooden Spool Ornaments:
Step 1. Find a wooden spool in your treasure trove and cut the thread off. Don't feel bad - old thread is not good to sew with anyway! If you don't have any wooden spools, you can find them really easily at thrift and antique stores.
Step 2. Cut or rip a long strip of fabric, about 1"-1.5" wide and 20"-40" long, depending on how large the spool is. Ripping is actually best because the frayed edges look great.
Step 3. Lay one end of the fabric across the length of the spool, leaving about 6" free at the top.
Step 4: Beginning at the bottom of the spool, start wrapping the fabric around the spool, wrapping over top of the fabric you laid down in the previous step. Wrap all the way from the bottom to the top of the spool, scrunching the fabric down as you go.
Step 5. When you fill the whole spool, tie a double knot with the end of the fabric and the tail you left in Step 2. Cut the knot ends fairly short.
Step 6. Cut a length of ribbon (about 8"). Thread both ends through the hole in the spool so there's a loop at the top, and the two raw ends coming out the bottom.
Step 7. Hot glue the ribbon ends to the bottom of the spool, and cut the ribbon ends short so they don't overhang the spool edges. Be sure to use your hot glue on top of a safe work surface in case you drip. I usually just use a piece of parchment paper to protect my table.
Step 8. All done! Hang them on your tree or in your sewing room for year-round decoration.