Last winter I made a purse for a Christmas gift and felted it. I was a little nervous about putting it through the washing machine, so just washed it by hand in hot water, scrubbing it well, but that didn't work. It REALLY needed the rough-and-tumble of the machine, and once I got up my nerve and threw it in it came out nicely felted. I found the instructions, which were pretty simple, in a book of knitted bags that I found in the library (don't remember the name) and then I added a lining of shiny cotton fabric because the purse seemed sort of unfinished without it.
The gift was a big success!