Firstly YES you do need a lathe, making swarf is very rewarding - bear in mind when purchasing a Lathe the cost of all the additional items and tools required, micrometers, vernier gauges, lathe tooling, additional chucks, quick change tool posts, bench grinder for making lathe tools...etc etc...
I purchased a little Taig Lathe from Peatol (
http://peatol.com/), it's a very small lathe but for small precise work it's absolutely ideal. I'm currently making a sturdy hardwood draw unit for mounting it on. The above link that Bunker gave to the chinese import 7 x 12 type of lathe will be ideal to for modifying yoyo's!