I do a lot of small carvings in basswood or other woods, mostly using a hook knife from warren cutlery. Most of my pieces are designed as pendants, so are 1-3" tall by 1" wide. I have a handle like this one and use blade number 10B from warrencutlery.com. (Amazon's photos do not match their part numbers.) The set is nice since it comes in a great travel case. I mostly use the one blade since it's good for detail and pretty decent for roughing out as well. If you're going to be doing more roughing out or less detail work, the other blades might be much more useful. I've tried the included chisels once, but felt like they weren't really sharp enough compared to my flexcuts.

 

I also use small palm gouges from flexcut. I like this flat one when removing large areas of wood and want to keep the wood flat. I like the deeper gouges when removing larger amounts of wood. The V shapes are good for clean smooth lines. I have all three of the smaller sized sets, and use pieces from all of them depending what I'm doing. I like the interchangable starter set except for one thing, except for needing to switch out the blades all the time - I often switch between gouges after using them for just a few seconds.

 

 

For larger palm carvings, the sculptor's set is very popular, especially for 3foot and up logs, I like the starter set as it's a little smaller, I've been working on more 1-2 foot sized masks. Also useful for bigger stuff is a stand, I like the black and decker one here.