This is a project from the Return of the Stupid Sock Creatures. This is a great book to learn hand sewing technique, and it's a great way to get rid of ridiculous socks that have stretched-out elastic or mismatched mates.
I chopped up one very long sock that only had a mate the first time I wore it. I assembled the body, legs and ears this evening, and I may just wrap it up tomorrow night. I can't recommend this book enough for hand sewing technique. It's very fun. The book has a number of projects and explains the technique to create your own imaginative sock babies.