In case anyone wants to try it, here's how i did it. And please do, just give me credit ;). I'm sure someone with more skill could do a much better job, and this is a very creative project, in that you could vary the materials, face, or construction and come up with a very different outcome. Be warned, this was a no-pattern trial and error experiment, so the directions may not be the best I've ever written. If I do it again, and anyone is interested, I might make a pattern.

I picked a sweater from the ones I had bought. This one was a light green lambswool, either a ladies or girls size.
The original idea was a backpack, but I didn't know how long to make the straps, so I decided to go with a bag instead.

I started by cutting a square out of the bottom, leaving one side seam intact. I reversed it, and sewed it into a pouch (if i'd done the backpack idea, this would have also been when i added the straps in). The bottom finished edge of the sweater serves as the open top. The size could vary dependant on the size of the sweater (and the desired end result), but i made the pouch just slightly wider than the top of the sleeve of the sweater. Stitch a ribbon or whatever you want to use as a handle on either side of the pouch. If I'd been feeling ambitious i might have tried making the strap out of the sweater material, but I wasn't.

I cut the sleeve off straight at the shoulder. Since this sweater had 3/4 length sleeves, I used the whole thing, but basically, you need it to be a few inches short of the length of the pouch. Turn the sleeve wrong side out, and center the seam in the back. Now to make the trunk skinnier: About half way down the length of the sleeve, mark with pins. Come in about 3/4 in (depending on the size of your sleeve) on either side of the finished sleeve end, and mark with pins. You want a couple of inches between the pins. Then one each side, sew diagonally from the end pin to the middle pin. Turn rightside out and see if it looks vaguely elephant head like!

Turn the pouch so that the front is showing. Turn the trunk so the back is showing, trunk pointing up.
Slide the top of the sleeve into the pouch about 1/2 in and sew in place to the back of the pouch. The head and trunk should form the flap of the purse now.

I just guessed on the ears. Trial and error gave me a 45 degree triangle, with one side rounded off, and folded a bit to make them stand up. Hard to explain in writing :). I just tacked them on the sides of the head, and covered with buttons. Then added buttons for eyes, and that was about it! More embellishment might be fun too.