I found the tutorial at 320* Sycamore and it HAS to become my Net find of the week, it's too good not to share :)
The author of the Blog, Melissa, simply took some cheesecloth, poured liquid starch in a bucket and drenched the cheesecloth in the starch.
She then let them dry over her "ghost forms"
which in her case were bed risers with a moss ball on top and a pain bucket under one of them for a larger ghost. The moss ball gave her ghosts little green hairs so she recommends covering the balls in foil or plastic beforehand :) For the eyes she used felt, paper will do too.
How cute are they!
Thanks Melissa from 320* Sycamore for this cool tutorial, her blog is packed with good ideas, do check it out!