I'm a big fan of using recycled materials for craft projects with kids. It teaches them at a young age to think outside the box and find uses for things that might otherwise simply get discarded.
For this craft, we used toilet paper rolls and various scraps of paper to make owls. The kids had a hoot decorating the owls however they liked. At first I was a little nervous they wouldn't be seen as owls to anyone but our family, but once we put on some googly eyes and orange beaks, each creatures' owl-ness was unmistakable. And I'll even go so far as saying they are really cute...(especially when you consider they are made from trash).
Gather empty toilet paper rolls around the house. We have a box where we store our trash-to-treasure supplies, which comes in handy for projects like this.
Cut up various scraps of textured and colored paper, pipe cleaners, and felt scraps to use for the craft. Cut the orange felt into little triangles to use for the beak.
Apply glue to the various textured papers and pipe cleaners. We like to use Q-tips to dip our glue in because it keeps my three-year-old from drenching crafts in glue.
Attach wings, textures, beak, googly eyes, and any other decorations you want to use. I think beads and buttons would be fun too.