Angie, those flowers are made from tissue paper. I did not make them myself, although I don't think it's difficult. I didn't want to go on the hunt for the right color of tissue paper so I ordered them off etsy... i think I searched for pom flowers. I'm pretty sure I saw some instructions on Martha Stewart's blog/website on how to make them.
The hanging picture frames have been a staple in our nursery for all three kids. I've made a few as gifts for friends, too. Inexpensive, but looks nice and covers a good area of wall!