I use pearl cotton or the cheaper 'craft thread' you can find it next to the embroidery floss, and also can buy 24 or 36 skein bags of many colors for like $4-5 at Michaels, which is cheaper than the $1.35 a (bigger) skein costs otherwise. You can also use floss, but I don't as I like the look of the twisted ply pearl/craft thread.
You can decorate with trim or beads (I don't because I rather like them more grippable and beads hurt), but I wouldn't use beads on top, the pins might catch on them. What good is a pincushion if you can't put a pin in it?
Overall these take 30 min or less to make, time well spent and as much as I hate to say it, cute as a button!
MATERIALS and SUPPLIES: (for one shown in this instructable)Scissors, craft thread, craft felt, fiberfill and a soda bottlecap.
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Signing UpStep 1Cutting the Pieces
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http://www.schmaltzycraftsy.com/2008/01/lets-talk-stuffing.html
And come on over and see my work and get access to more tutorials:
http://flickr.com/photos/verybigjen/collections/72157594588116047/