If it's just being made taller... I'd like to see it accommodate a 8 inch needle... I don't know how much extra you need so it can close nicely without the points sticking through. I don't think it needs to be much wider. A yarn cake is only so wide, unless you have an odd size skein of yarn.
Measurements from my current sock/small project bags: 8.25 inches tall to bottom of the draw string. 1.5 inches from the bottom of the draw string to the top of the bag. Bottom of the bag is roughly 4x6 rectangle. Bag is 9 inches wide from side to side when flat, but top diameter is roughly 6.25"