Here is an easy way to make yo-yo's. If the opening in the center of the yo-yo will be covered you don't need to worry about the raw edge of the fabric. It is also easiest to cut a template or pattern out of plastic (a butter lid works well) and then use it to draw circles on the wrong side of the fabric with a pencil, chalk or those air or water erasable pens. You can get more from your fabric if you draw the first row almost touching and then the second row with the circles between the circles on the first row .
The diameter of the circle should be twice the diameter of the finished yo-yo plus 1/2". Take a running stitch around the outside 1/4" from the edge and gather until almost closed. Tie off the thread. Place the yo-yo flat and arrange the opening in the center and iron. If you want the opening facing out so they show on your project add an extra 1/2" to the diameter of your circle. Turn under the edge 1/4" and stitch down before you gather the edge. This will give you a finished edge around the opening.