I don't belive you will have much luck with eather of those sites. The shipping is what kill's the sale. If you sell a item for we will say $20.00 and the shipping is $15.00 is the piece worth $35.00?? probly not. And if you include the shipping than you are still in the hole? I have been around ebay when the number were under a million Now look where they are now. I don't see where you are located but craft show's are the best.
UPS gives discounted rates to ebay sellers. I ship a lot of picture frame moulding -- I've shipped a box of 4 -1/2 ft long moulding for $10 to $12. I have shipped 16 x 20s frames for the same price. Research the rates. For some items, USPS is cheaper, for bigger heavier items, UPS is better and sometimes FedEx is the best.
Even still, you are right, shipping can hurt sales. However, some people who may not attend craft shows, and not have access to stuff like this anywhere except online. Those people could be customers. Also, everyone else has to deal with shipping too -- so it won't put your prices higher than your other online competition, it will only put your prices higher than competition at places like craft shows etc. but not everyone goes to craft shows...
Definetely do the craft shows thing, but I'd also recommend at least trying ebay. Right now, ebay has 100 free auction listings a month (any start price) that lasts until January 7, 2011. You can't lose. Etsy doesn't take too much money to start a shop. I'd try them both, and also consider a website. Having an online presence in addition to craft shows would be great that way you will have something for people to refer their friends and family to.