I started off by casting on 40 stitches using Judy's Magic Cast On using two circular needles (I'd previously tried the figure 8 cast on and Could. Not. Make. It. Work! Fortunately this method was a lot easier :) ) and just started knitting in the round until I felt the 'hood' was big enough (took me awhile to get the tension right when I changed needles - I ended up holding both needles in the same hand for the first couple of stitches to get it tight enough). I determined which side was the front, knit the first 5 stitches, bound off the next 10 stitches and knit the last 5 stitches.
I then alternated between knitting and purling each row until the sides were long enough. Unfortunately I ended up making it a tad too long, as I didn't stop to think that gravity would make it stretch once I put the iPhone into the pouch. I'm not yet too comfortable with unravelling and picking up stitches again though, so I was afraid that I would have to start all over again if I went back and unravelled part of it, so I just left it as it is. I knit the first 5 stitches on the front, cast on another 10 using a modified version of the long-tail cast on (it probably has a proper name, but I wouldn't have a clue), knit the last 5 stitches, and then went back to knitting in the round until the top was done. I ended up with 2 rounds of 1k-1p rib (should probably have knitted 3-4 rounds, but oh well), and then bound off.
The string is crocheted.