If you are an active DIYer in the categories of knitting, quilting, upholstering and anything involving fabric and thread, Purl Soho is good to have on your map.
Started in 2002 by Joelle & Jennifer Hoverson, we took knitting lessons there a few years back and have enjoyed watching them grow into sort of a household name among the crafty set here in NYC. Martha Stewart herself has been seen (by us) frequenting the shop....
What is particularly impressive is the Hoverson's eye for design. Their windows always have the most beautiful fabric and yarn samples in them, most of which can be seen (pretty well) in their large and effective online shop.
Their online shop is also a who's-who of the current fabric design world and a good place to go if you want to know what's going on. Purl Soho can be found in two shops on Sullivan Street in NYC as well as online: www.purlsoho.com.
Good Purl Links
>> The Purl Bee - their cool, lots pics blog
>> Nice Flickr pics of Purl
100 DIY Ideas for the 3-Day Weekend
Danielle's Charming, Classic Walk-Up
Good Food to Share 
The Big Book of Small, Cool Spaces 
Apartment Therapy Presents 
The Eight-Step Home Cure 
White Enamel Flatwa...
How To Cook Fluffy, Tasty Quinoa
Perfect Summer Cocktail Recipe: Honey Bourbon Lemonade
I love this store but knitters beware, it is a bit (a lot) pricey. Their yarns are really nice but since its a very tiny store and nothing is displayed with its tag visible its best to ask someone where the merino aran, etc. is. They also have a fabric shop a few doors down that is equally tiny but equally filled with awesome goodies!
oh! and lets not forget www.purlbee.com! Lots of neat ideas on there :)
the place to go if you want to spurge on good yummy yarns in great colors... the fabric is top notch too!
GREAT repro fabrics from these folks--spendy, but worth it. I pillaged their online sale bins before the holidays and really scored with the perfect gift for a quilting/costuming cousin.
Many of the so-called "repro" fabrics are actually new designs by Amy Butler (see amybutlerdesign.com).
photos on their site are so lovely it just makes me want to buy all of the fabric. i think the fabrics are pretty fairly priced, i have seen amy butler and joel dewberry fabrics for less at fabric.com but purl seems to carry more patterns from a collection.