Silnylon?

It's a staple for outdoor gear. The majority of tents, tarp, bivy bottoms, and gear bags are made of it. Probably the most popular on this site would be the 1.35 oz material. Waterproof, lightweight, abrasion resistant, good stuff! What, in particular, were you looking to use it for?

There are different weights of silnylon. Most commonly referenced here is 1.1 oz (uncoated weight) ripstop siliconized nylon, which will weigh 1.3 to 1.5 oz per square yard with silicon impregnation. Exact weights vary due to manufacturing tolerances. Slightly heavier versions are also in use commercially, including floors of some lightweight shelters and in some packs.

The 1.1 oz will abraid relatively easily compared to much heavier traditional nylons like oxfords. Silnylon is casually considered to be waterproof, although most versions don't meet the military definition of 25 psi. It will reportedly 'mist' lightly in heavy rains and can soak through if under pressure (i.e. kneeling on it, under pack straps, or similar).

Silnylon makes pretty good tarps, ponchos, and low-abrasion portions of packs. It is not breathable, so is has condensation issues when used as a tent or other enclosed shelter without ample ventilation. Those doing heavy bushwacking or mountaineering will go with more durable fabrics for packs due to silnylon's tendency to puncture, rip, or abraid, but it is in regular use for on-trail backpacks.

Anyone know a good online retailer to purchase silnylon to make homemade items?

Seattle Fabrics: http://www.seattlefabrics.com/

Outdoor Wilderness Fabrics: http://www.owfinc.com/

Thru-Hiker

The rain shed – http://www.therainshed.com

and I second the recomendation for Thru Hiker. Great deals on 2nds.

OWF has Epic coated nylon that only weighs 1.7 oz or so. For the extra 0.4 oz you get breathability in most conditions. You also get a bigger invoice. Silnylon, particularly seconds, are much cheaper.

Listed under their new items as "EPIC RIP BLK" = Epic waterproof/breathable Peak Nylon mini Ripstop Black

noah lamport http://noahlamport.com/ has silnylon for the cheapest price i have seen, $2.75/yd. they do have a minimum order of 10 yards however.
you can also occasionally find silnylon at your local walmart in the "dollar bin" for $1/yd but dont bother asking employees to help you find it. they will not know if they have any in stock, they have no control over what kind of material they get for this clearance section, and they will actually not even know what silnylon is.
i picked up about 20 yards from my local walmart, but only after i came up empty handed from five differient walmarts on a road trip.