The character creator is in the Watchtower Laboratory and there might be one also in the Batcave, I haven't explored enough to remember where everything is.
You can start buying characters a believe after the 7th level......i read it online somewhere.....you will also find switches in the Watchtower that allow you go access "Super Freeplay Mode", which is available in the Hub sections of the game (this just allows you to select characters by holding the switch character button)..nothing new, i think they just decided to give it a name. Once you find the switches is when you can buy the characters, at least this is what I found to be true.
Word of advice though, I would hold onto all the studs you can so that you can purchase the red brick stud multipliers. Apparently the multipliers are in the first 5 levels of the game ad can be found by Plastic Man. Stud Multipliers cost between 1 and 5 million studs and it is looking like some of the characters are quite expensive. I think Doomsday is 1.5 million. So I mistakenly bought a few characters and now I have to farm a bit to get enough to buy the red bricks.