Sometimes the trick in working with novelty yarns with evenly spaced blobs -- in this case, little butterfly shapes -- is finding the right hook or needles to use. The suggested hook wasn't working for me, so I went down a couple of sizes.
Success.
On its website, Red Heart yarns has a couple of great videos on working with Pomp-a-Doodle, a yarn with little puffballs along the strand. Pomp-a-Doodle has been discontinued, but you can still (as of 5/28/14) watch the videos and use the same techniques to crochet or knit similar novelty yarns.