Great question! I will follow this question for sure :).
I love Arlene's ModPodge idea. I covered cheap plastic lightswitch covers with Egyptian art pictures cut from a museum magazine & ModPodged it all. They look awesome!
Here are three more ideas:
You could melt down old candles to make a new candle. Either mix all the wax together or make layers of colors. All you'll need to buy is a new wick.
I posted a hub about making baby onesies. You can get a five-pack of Gerber onesies for about $12.99 and them decorate them with scrap fabric or patches.
Make duct tape wallets. There are some awesome duct tape wallets for inspiration at http://www.SashaTheCat.com.