Although I've seen rag wreaths all over this year, I got this idea particularly from Jane and the Ducks and decided to make it for a Christmas present for my Auntie. (Not giving away any surprises, this one's already been delivered!)
You could use whatever fabric scraps you have. I happened to have a bunch of flannel, which gave the thing a nice coziness I think. As Jane says, get a wreath shaped piece of cardboard, cut fabric strips, and tie them on. The only thing I will add is that you should definitely cut just a few strips to start with and make sure they're the right length for the width of your cardboard. She used eight inch strips, which I found were a little short. Other than that, it's about as easy as it gets!