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The Peg Dolls were life-sized dolls that inhabited the doll's house in George's cupboard. (DW: Night Terrors)
Powers & Abilities
The Peg Dolls forced their victims to transform into other Peg Dolls themselves once they were captured in their embrace. The transformation was instantaneous and began with the hands, which started to get bigger and turn to wood, followed by the rest of the victim's body. None of the person's original personality would apparently remain; The Doctor referred to it a state of 'living death'. (DW : Night Terrors)
History
The Peg Dolls inhabited the dolls' house in George's cupboard, which became a psychic repository for all his fears. Subsequently, the dolls were animated, and began hunting any individuals who appeared in the house to turn them into Dolls.
When Rory and Amy were trapped in the house, they stumbled across the dolls and believed they were harmless. Eventually they realised the extent of their powers when they witnessed Purcell being turned into one of the Dolls, and tried evading them as much as possible. They also began hunting the Doctor and Alex when they appeared in the doll house, until they managed to corner them and Rory, having managed to convert Amy in the meantime. They proceeded to attack them, momentarily stopping when George himself appeared in the same room.
The Dolls turned their attention to George and surrounded him, until Alex pushed them aside to comfort his son and assure him that he would not abandon him. When Alex's unconditional love for his son allowed George to overcome his fears, the Peg Dolls were expelled from the house and reverted to their original form. (DW: Night Terrors)