I learned how to make this fun, versatile hand puppet in college. This particular one is called a "neutral" puppet because it has no eyes or mouth and allows the operator to decide what kind of mood the puppet is in, or what kind of expression he is making. The pattern is fairly simple (my favorite of all the puppets out there) and I'd be happy to teach anyone aching to learn. :-) But I warn you, some stages are tedious and waiting for the glue to dry is the most boring part. The most expensive supply item is probably the stryofoam ball that forms the head, but even then you can get 'em 2 for $3 or so. And then there's lots of hot glue invovled. (Yes!)
These guys are a little fragile, so I'd probably want to aim them at slightly older children who might be cruising the craft fair, and who have big enough hands anyway.