Materials
Materials (Updated 3/2/13)
Wood
Any wood will do. If you have a table saw a simple 2x4 is all you really need to get started. I started with a pine 2x4 for my first train but have since moved on to popular as my wood of choice because it looks nicer and is readily available at my nearby Home Depot. Poplar is a soft wood, however, and if your trains are ment to be used and abused harder wood might be advisable. A variety pack of basswood from a hobby or craft store can be very useful for adding details. Of course, a variety of dowel sizes is a must.
With a table saw any size stock can be created. The three common sizes of wood I like to have handy are lengths of 1" x 1" for box cars and the cabs of locomotives, 1" x 1/8" for the flat base plate of any car and several other uses, and 3/4" x 9/16" for the truck of any car. Lengths of these sizes an be ripped using a table saw. Alternatively, hobby and craft stores often carry 1" x 1" and 3/4" x 3/4" square hardwood dowels which can be a bit expensive but reduce the amount of work required on the table saw. I've also found 1 1/2" x 3/16" thick planks at hobby stores which can substitute for 1/8" stock.
Couplings
Todd Hoogerland uses a combination of a 1/2" ceramic disk magnet with a hole in it and a furniture nail to create a simple, attractive, and effective coupling system. I don't have experience with any other system nor do I have a single complaint. Cherry Tree Toys is a good place to buy magnets (the only down side is that the minimum quantity is 50 of each). 3/2/13 Update: I used to also get the nails pictured below (the ones with ridges on the shaft) from Cherry Tree. However, the nails they sell no longer look like these even though they have not updated the image on their site. The nails they sell now have a slightly smaller diameter head and have a much taller dome. They're workable but I like them much less than their old ones. I've had some luck finding better alternative nails on eBay but it's hit and miss.
This is the ideal nail but, sadly, I can't find them anywhere anymore.
The nail on the left is what Cherry Tree sells these days (early 2013). Their old nail (center) was ideal. The nail on the right is an example of a nail I found on eBay but they're scarce.
Wheels and Axels
You will notice that I refer to Todd Hoogerland's website frequently. He's created a great resource for people interested in making toy wood trains. The only aspect of his advice which I feel I have improved upon concerns wheels and axels. Todd uses 3/4" diameter turned wood wheels that are 3/32" thick and have a 1/8" hole and which can be purchased from craft or woodworking supply stores. He then enlarges the hole to fit #6 wood screws which are used as axels. This wheel and axel system is adequate. The wheels turn, they're strong, and they're durable. But compared to commercially produced wheels they leave much to be desired. The comparatively thick wood wheels rubbing against the threads of the wood screws creates a lot of friction. Through much trial and error I've come up with a few alternatives which perform quite a bit better though none of which are as simple as Todd's (simple is good). Check out the page dedicated wheels and axels for lots of additional details including the results of scientific tests comparing different wheel systems. For now, here are some of the basics.
Standard Wood Wheels (3/4" D., 3/16" W., 1/8" hole)
Standard turned wood wheels are easy to use and work fine. They often suffer from manufacturing imperfections. Sometimes they are not perfectly round and sometimes the hole is not centered. Also, their appearence (to me) is more like a rubber tire than a train wheel. But that can be solved by just turning the wheel over. The opposite side is flat and smooth. These wheels sell for about $0.07 each (excluding shipping).
Wooden Nickels (3/4" D., 1/8" W, no hole)
I've recently discovered an interesting alternative to the standard wood wheels mentioned above. These are sold at my local woodworking supply shop under the name "wooden nickels". Online retailers appear to just call them wood disks. These disks can are slightly narrower than standard wood wheels (which I think is a good thing), don't have the tire-like appearance of standard wood wheels, seem to be more consistently round than wood wheels, and to me give the illusion of being slightly larger than standard wood wheels (also a good thing). The big downside is that they do not come with a pre made hole. To have any hope of making your own perfectly centered hole you need a drill press. If you're game for a some extra work and happen to have a drill press the wooden nickel makes a nice train wheel. These wheels go for $0.04-$0.08 each (excluding shipping).
Link to Woodworks' wood disks. I've not actually used this exact product from Woodworks but it appears to be comparable to what's sold by my local wood craft store. I buy my wooden nickels from a local shop called The Wood Connection in Murray, Utah. But they don't really have a web presence other than a blog.
Plastic Airplane Wheels
My search for a perfectly round wheel comparable to commercial resulted in this option--Guillow's plastic wheels. They are intended for light-weight toy airplanes. They are very thin but perfectly round. The axel hole is very small but can be enlarged, of course. In my opinion they are not "substantial" enough for trains. They're a little too thin. The other big problem is that they are significantly more expensive than wood wheels. I've seen them for as cheap as $0.25 per wheel (excluding shipping). I don't actually recommend these but I'm just sharing an alternative that I've tried.
Link to Guillows' Plastic Airplane Wheels
Wood Screw Axels
#6 wood screws are a simple and effective axel. However, the threads of the axel create a lot friction. Also, I don't think the head of the screw (either regular or philips head) is very attractive. But children most likely won't care either way. Under the right circumstances wood screw axels might be the right thing. Once I stumbled across #6 wood screws with a smooth top shank. This screw helped reduce friction quite a bit. If you can find them I'd strongly recommend these smooth shank screws over standard wood screws. See the wheel and axel page for performance results.
#6 wood screws can be found at any hardware store
#6 wood screws with a smooth shank are harder to find but worth the search
Brass Tube Axels and Furniture Tack Caps
Instead of using screws, 3/32" brass tubing makes an excellent axel which extends all the way through the truck structure. Small furniture tacks inserted and glued into the tubing securely hold the wheels. This system results in much better rolling qualities than screw axels. Initially my concern about this system was durability. I was worried that the abuse inflicted on a train by a child would result in the furniture tacks coming dislodged from the axel. But I've yet to see one of these axels actual fail in the real world and this includes some trains which have been played with for four years by four different children. In fact, once or twice I've made a mistake and tried to pull the furniture tack out with pliers after the glue dried. No matter how hard I tried I couldn't do it. I believe the key to its strength comes form the fact that the polyurethane glue expands as it dries. The expansion wedges the tack very firmly into the already snug axel tube. I've devoted an entire page to this axel system here.
I buy brass tubing produced produced from K&S Engineering. The tubing is sold in various lengths and has a hole diameter of .066". The hole diameter is quite important because the furniture tacks need to fit snuggly inside. One online retailer I've purchased from is HobbyPeople.net who sells brass tubing for less than a dollar a foot.
The furniture tacks I find work best with brass tube axels are maid by Hillman. I've not purchased these online before but I've consistently found them at my local Lowes hardware store. A package of 25 costs about $1.50.
I've used a polyurethane glue by Elmers which seems to do a great job to hold the furniture tacks in place. This can be found pretty much anywhere including Walmart.
My most complex but best performing axel system also involves #6S flat brass washers. Again, I've only purchased these at my local hardware store and have not searched for them online.