The best things I've found for eyes are ping pong balls (cut in half for Kermit-like eyes), plastic Christmas Tree Ornaments (you can find these clear year-round at Michael's), and plastic spoons (with the handles cut off to make Ernie-like eyes).
Early on, I used white felt, plastic bowls, whiffle balls, plastic balls from McDonald's Playland (the ones kids jump around in) and whatever else I could find. I also use those plastic globes for yard lights that they sell at hardware stores (it's very similar to the globe they use on the Sesame Street Light pole).
Pretty much, you can use anything for eyes. Or noses. Or puppets. There's no wrong answer -- but whatever you use, try to make it as light as possible. After you hoist a 20-pound puppet for a minute or two, you'll realize that using two bowling balls wasn't the best idea, after all.