Work on a multiple of 3 stitches, plus 2 (3, 6, 9, etc. and then add 2 more stitches) This is a 6 row repeat:
Row 1: Knit 2 *YO, SSK, K1*
Rows 2-4-6: Purl all stitches
Row 3: Knit 3 *YO, SSK, K1*, end row with Knit 3
Row 5: Knit 1 *YO, SSK, K1*, end row with Knit 2
Repeat these 6 rows for pattern.
This stitch pattern would make a lovely spring scarf in a lace or fingering weight yarn, or even a shoulder shawl.
There is actually a difference between "knitted lace" and "lace knitting"; knitted lace is where the pattern is worked on both the front and back sides of the fabric (yo and decreases) and lace knitting typically just has the pattern work on the front of the fabric (plain knit or purl stitches are worked on the wrong side). This is a somewhat confusing topic, and there are a number of blogs and articles written on the subject. If you are interested in looking into this further, below are a couple of links :
Sheep to Shawl Blog
Wikipedia