String

String is an item that was added to the game in Indev. String is primarily received by killing Spiders, which drop 0 - 2 units on death, but can also be obtained by destroying Cobwebs. String has a $4/5$ (80%) chance of spawning in a Dungeon chest, where it will appear in stacks of 1 - 4 units. This is not a practical way to find String though, since Spiders can be used to get string more quickly and in larger amounts. In Abandoned Mine Shafts and some room of Strongholds one might find Cobwebs which can be slashed with a sword or shears to get string.

String has no special functions and can be only used in Crafting.

Crafting
String is a vital component to two recipes, the Bow and the Fishing Rod. String can also be used to make Wool, but this is rather wasteful as Wool can be obtained from Sheep. It is more economical that you save your string for making more Fishing Rods or more Bows that can be used to make Dispensers.

String can also be found in cobwebs. Cobwebs are mostly found abandoned mineshafts.

Trivia

 * For a period in Indev, Mob drops were random. The Mobs at the time had a chance of dropping String, Gunpowder, Feathers, or Flint and Steel. This can be seen with a Sheep dropping String. This was changed in an Indev update on February 19, 2010. Spiders were made to drop only String, and other mobs dropped only their respective items.
 * It is recommended that you do not use string to make wool, since it is a waste of materials and is more dangerous while shearing sheep is much easier. It can be useful, however, if you need to make a bed and you have a lot of string but no sheep are present, or if you are on peaceful mode and already have a bountiful supply of string from Abandoned Mineshafts.
 * Prior to Beta 1.6.6, nine pieces of string, one in each square of the large crafting grid, were needed to craft one block of wool.

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