When I hand stitch, I use an edge groover to mark the entire outline on the face of the holster. I use a freehand groover on the inside line (the line that runs under the belly of the pistol - your avenger pattern doesn't require one of these but they're like $10 or $15). I then run an overstitch wheel at 6 spi over the grooves. I take the smallest drill bit I have and pre-drill each hole on the marks left by the overstitch wheel. I then take some waxed 4-cord thread (my fav brand:
http://www.mainethread.com ) and saddle stitch the whole thing. I like to use harness needles for stitching, but I know Tandy sells some generic needles that work well, too. The nice thing about the groovers is that they create a perfect line to run your stitches in, and because you took a thin layer of leather off of the grain side, your stitches will sit in the groove and be slightly inset - this is good for durability and looks nice, too. I also use a variety of other tools, but these are the ones I use when hand stitching.
Tip: A pair of surgical gloves while stitching helps you grab ahold of the needle and keeps your wedding ring and other things off the leather while stitching. I also use a thimble and when making the 2nd pass around the stitch line, require a set of needle-nose pliers to help pull the needle through. If the thread is digging in on my pinky finger from pulling the stitch tight, I wrap it with some medical tape.
Total investment in tools: ~$30 - $40
You can acquire a freehand groover, edge groover, and overstitch wheel from Tandy, but probably cheaper from the internet.
adjustable groover
freehand groover
overstitch wheel
I wrecked my hands to the point that they bled and it hurt to wash them. I knew at that time I was ready to spring for the machine. If you have any other questions, just ask.