I think your concept is unique and I can't wait to see what goes on in the future. In your design brief there is a widow in one of your paragraphs, just a heads up. I would maybe think of getting away the blackletter typefaces, and move to more modern typefaces since you said you wanted to aim this to a younger group of people. Other than that good :)
i'm digging your idea for container. i am leaning more toward the multifaceted shape more than just the square/rectangular box. it's more interesting and allows for more interaction. i think i like the tones in your middle color scheme the most. i like your blackletter type, i think it can be more modern and young with your mixing with a san serif. the idea of punk is different and unexpected, but i don't know how narrow you want to project to that audience, keep it open. good, good.
I applaud you for pushing past the traditional idea of a knitting community, and targeting this toward a modern, younger demographic. It will be a fun twist on yarn packaging. I am not a fan of the blackletter style, but that could just be a personal preference. It still seems like you could come up with something fresher and more different though. Since knitting is something that has been around for so long and it's done by hand, maybe think about analog methods you can use to express your design.