Step 1: Materials and Tools
-LilyPad Arduino with programmer and USB cable - Maker Shed
-LiPower board - Sparkfun
-lithium-polymer battery (and charger) - Sparkfun
-LilyPad AAA battery holder (comes with the Maker Shed kit linked above)
-conductive thread - Lame Lifesaver
-conductive velcro - Less EMF
-sticky-back velcro (I got mine at Michael's)
-bag or backpack
-fabric patch to mount circuit
-small scrap of fabric for switch
-source code and schematic
Coil the leads of each LED: make the longer lead (positive) into a square spiral, and the shorter lead (negative) into a round spiral.
Step 2: Sew the LED grounds
Step 3: Sew the power supply and LilyPad
Sew the other conductive velcro tab down next to (but not touching) the previously-sewn tab. Stitch a line to the + on the LilyPad Arduino. I reinforced these two power leads a few times to reduce the resistance of this switchable area.
Stitch the ground of the power supply to the line of grounds around the edge. Same goes for the LilyPad Arduino. Look at that schematic for help placing the traces.