Details
Minecraft Game:Horse Update 1.6.2
You need 2 colored wool to craft 3 carpet.
Carpets are thin blocks used for decoration
Carpets must be placed on a block, and cannot be placed freely or be free-floating in the world.
Carpets can be used as a safer alternative to decorative flooring, as wool is flammable, but interestingly, carpets are not.
Official release 1.6.