I felt Mr. Gnome needed a friend so I made Mr. Dwarf. I knitted him up using Jean Greenhowe's doll pattern http://www.jeangreenhowe.com/patterns.html. I crocheted a wig cap for him and crocheted the beard the way I did for Mr. Gnome except when I was finished I hooked long strands of yarn to the top loops across the beard.
I made his clothes out of wool felt. They were both a lot of fun to make. And my son was happy to get them on Christmas.