I've long been a shopper at Woot!, so finding Shirt.Woot! was welcome news. The business model is simple: one day, one shirt. They periodically hold derbies in which customers submit their own designs, and the "Woot Community" (yes, apparently there is a rather large one) votes on a winner, which they then manufacture and sell.
Well, this is all neat, but how do the shirts get made? A recent Shirt.Woot blog post shows the whole process. It's an interesting process for a shirt novice like myself -- it shows the whole screen printing process, including neat machines like the light-flasher (which "flash-dries the ink with the fury of a thousand suns").
I'll add Shirt.Woot to my bookmarks, but I also want to point you to my longtime favorite shirt company: Panic, which is actually a Mac shareware company that happens to own the U.S. license to make Katamari Damacy shirts. For interesting behind-the-scenes info on the Katamari shirts, read Cabel Sasser's blog (scroll down to "The Story of the Katamari Shirts").