One method to surround a focal in flat peyote is to secure a ring of seed beads around the focal bead, then use the ring as the base row for peyote. The October 2007 issue of B&B has detailed instructions on how to do this, or you can buy the project Beading without Boundaries
As for what beads to use, you could probably find a way to include any type of bead, but it might be easier to start with something that has at least one smooth side, so that it will lay flat. Flat circle or oval beads would be my first choice.
Hope this helps!
Morti