I've been hearing about a local craft shop that is popular with foreigners since we arrived in Yerevan over a year ago. Then recently, I overheard the school director's wife talking about a folk art and craft studio right in our neighborhood. It turns out both places are one and the same: Sharan Craft Center.
I admired their high-quality merchandise at the International Charity Bazaar at the Marriott downtown back in October, but didn't visit the craft center itself until about a week ago...all this time, it's been a mere 5-minute walk from our apartment!
Sharan is a wonderful place employing talented local artisans who produce beautiful items for home and family: knit sweaters, caps, scarves, and mittens; holiday ornaments and Christmas stockings; hand-embroidered potholders, wooden kitchen utensils; casual bracelets and hair accessories for women and girls; and adorable dolls and other little toys.
I don't think they have their own web site, but I did find TradeExpressions.com, which has some information about the studio, plus a few items available for purchase -- though I'd say they are WAY overpriced compared to what I paid in-store.
I also found this interesting article from the Armenian Reporter.