Big loops, Tight Stitches, and Other Errata

It's Problem Fixin' Time ...

When people first knit, they over-tighten the stitches - it looks kind of sloppy if you don't, right? But you really can relax and give it some space. Don't panic - let the needles do their job! You may have minor imperfections but they will ease out, be worked out in blocking, OR become beloved marks of your handiwork. Try knitting your whole row a bit more loosely, snug that last one just a wee bit, turn knit 1, snug up just a wee bit ... then knit the rest f the row nice and easy.
Don't be afraid to "scoop out" that stitch on the needle as you're catching the yarn and bring it through for your new stitch, then be generous with your working yarn as you create that new st and slide the old one off.
The one thing that is a little hard to catch up on later is if you let your needles get really far apart ... i.e. if you separate them 6 or 8 inches between stitches (don't laugh, I've seen it done!) Keep them relatively close together and you'll be happier in the end.
When I started knitting, I followed the advice of Knitting for Dummies: I used #9 needles and a light colored, worsted (that's just your average, mid-weight wool) weight wool. The wool has a bit of stretch to it, is a nice, in-between size, and won't make your hands sweaty like acrylic might. The needle size has more to do with your yarn weight (that's how thick or thin it is) than whether you're a beginner or experienced.
You usually want to follow the guidelines on the yarn label (look at the square with the crossed knitting neeedles), but don't get too caught up in it - if it says to use US 8 and you have US 9's at home, it's OK for now. But if you use 17's with a fingering weight yarn, you'll end up with a lacy, airy bit that, while probably not offensive, won't give you the opportunity to really see your stitches forming. Stay within a size or two for now.
We'll re-visit this yarn weight and needle size topic later when you do a project that requires accurate gauge, but for now, get knitting, stay loose, and have fun!