There seems to be something about bags at the moment as I have taken to knitting a couple.
Firstly Debbie Abrahams "Spaced Out" from Rowan book 35.
It has gone from this

to this

The base is a moss stitch rectangle and then you cast on along each side to knit the side panels and the side gusset and strap. Moss stitch is hard work but it does give a lovely texture.
The coloured circles are done in stocking stitch. The yarn used is Rowan handknit DK cotton and I am doing the colour scheme in the book but I do think the colours look prettier knitted up than they do in the book.
There are some buttons to sew on to the finished bag and also some beading to do on the handle. The finished bag is lined but I have yet to work out what to line it with.
And then there is Mexican Stripe by Brandon Mably. This is knitted in Cotton Glace.

Mexican Stripe by Brandon Mably - Progress to date
There are a lot of stitches so they are a little bunched but hopefully you get a feel for the colours. I will even get to use my crochet skills on this one to make the fasten!

Me too Anna. I am really in to bags and small things right now. I have just gotent the yarns together for Heather in the same colourway as the book and have found some bag handles in a charity shop - so I plan on starting that one really soon too.