I have been crocheting for years.  I guess you could say that I am addicted to yarn.  After leaving my job to care for my children I wanted to turn my hobby into cash.  These are the different things I have tried and my experiences.

Craft Fairs

This was a tough sell this year because of the economy.  A lot of people were looking but not buying.  Still it was worth it.  You need to find out about what events are in your area.  This information is listed in local publishings such as your newspaper.  A lot of churches also have craft fairs especially around the holidays.  Don't hesitate to call around.  It is great to find someone that has been doing this for a while because they can tell you which ones are worth your time.  I have done shows that have table fees of anywhere from free to $75.  There are some that run $600+ for the day.  Keep in mind that you have to spend money to make money.  I do not know about other states or countries but you will need to obtain a sales tax number and report that quaterly.  All of that gets a bit confusing at first but it is not too bad.  If you feel more comfortable with it contact an accountant.  Maybe you could pay one to help you for just the first year.  Pricing things at crafts fairs is a challenge.  Make sure you know what your competition is doing.  Set up early and take the time to walk around and see what others are charging.  We all do it so don't be afraid just try to be a bit discreet.

I do not recommend craft fairs that are also tag sales or flea markets.  People will try to bargain you down on your price.  I am not there to argue with people.  I rather put my energy into talking to a customer that has questions about my items and generally appreciates my work.

Farmer's Market

Some farmers markets will allow some crafts to be sold.  Again, you will need to deal with the tax thing.  Some of these may also require you to carry insurance.  Sometimes an umbrella policy will do.  This was not a big money maker for me but I loved the atmosphere. 

Aokcorral.com

This site has been great.  For a small fee you can set up a "booth" for a year.  The site is already getting some traffic to it so you should start getting shoppers right away.  You need a PayPal account for this.  The women that run the site give great support if you have any questions.  I have 2 booths on there if you want to check out how I set mine up.  They are Pine Meadow Crafts and Connecticut Crafters.

eBay

A great place to sell used baby gear but not crafts.  Yes, you can sell some things.  I have but it is hard to get a decent price for them on there.  eBay shoppers want bargains.

Etsy.com

Very similar to eBay except it is only for handmade things.  Shoppers go there looking for unique handmade items.  Just like aokcorral.com there is already traffic going to the site every day so you get a head start.  You will pay a listing fee and a final value fee for your items but they are cheaper then eBay.  You will need aPayPal account.  As a side note, it is a real fun place to shop too.

Do not expect to make a ton of money.  Chances are that by the time you figure out your expenses you will be making less then minimum wage.  It is however a great work environment.  You get to work from home and no one will ever know if you got around to brushing your hair this morning.  I look at it as a way to pay for my yarn addiction.  If I sell something then I can justify going to the craft store to replenish my supply.   I do know of some people that have made a living at it.  Depending on your craft it is possible.  Regardless it is a lot of fun and a great way to meet people.