Putting Furball to ReUse
Over at Inhabitots they posted about a pet groomer putting all the cut hair to use by making yarn and knitting items with it. Some breeds likely work better than others. Here is a video about her business originally aired on Animal Planet:
While you may or may not want to do it with your pet's hair, if your interested in making your own yarn we have Start spinning : everything you need to know to make great yarn and Dyeing to knit : how to use and create your own beautiful hand-dyed yarns. Then get started on your project with A fine fleece : knitting with handspun yarns and our very large collection of knitting pattern books.