1. Get yourself an old bike, one you don't mind losing if it gets knicked or damaged or carted off by the council. Could try your local friendly community d.i.y bike workshop or cycle store to salvage stuff on its way to the tip.
2. Knit yourself some strips of wool. I vaguely measured what I was knitting up against each piece of bike structure, but you don't need to be exact due to the stretchiness in the wool.
3. Sew each piece of knitting closed with more wool, whilst you hold it on the bit of bike it's made for. When all the frame, saddle bars, as much as possible, is covered in little wooly socks, sew them together too, turning it into one big bike-sock.
4. Weave wool in it's un-knitted form around spokes to make some cool patterns.
5. Add pompoms to taste.
6. Go and lock it up somewhere crazy and and make the public say oooh and ahhh.