What do you call those cloth things that have a picture on it and you can sew onto a bag or something?

(At least, I think you sew them on, I never actually bought one before, either you sew them or I think you iron them)

What I'm talking about, for example, is like a crest or something, made entirely of threads/cloth, and it usually comes in the form of an anime character? Sorry if I'm not being clear enough ^^'' I can't really explain it well.... But I go into this Asian bookstore near my place and I will see these things hanging on a rack. The one I remember the most is the one made for Bleach fans, it was Ichigo from Bleach.

If you know what I'm talking about can please tell me what they're called, and if you know how to make them, can you tell me how? I want to look them up, as I'm trying to make one. Or, at least tell me whether you sew them on or iron them on, after you buy them?