Eh, some people are really sensitive about that stuff, and some people are just trying to make conversation. You don't need to explain exactly how you used the gift--you can just say, "Oh, it was so great and generous of you to give it to me! I loved it!" and you can say this no matter what you did with it--garbage, regifted, donated, returned. You loved that they gave you a gift, even if you didn't love the gift itself. If they ask more specific questions, I like the idea of saying, "I haven't found a great recipe for it yet but I've got some ideas!" and then change the subject. Or, you can read the situation and determine if being totally honest is best--and with a close friend or relative, sometimes that's best so they get you something you REALLY want next time--you can do this casually without being rude, like "Oh, I have so many gadgets I want on my Amazon list, I'll never have time/money/whatever to buy them all!" or "My Pinterest wish list is full of gadgets I'd love to try!" If they are good with that kind of thing, they'll ask for the list, or find it later and buy something from it for you. :D
And keep in mind: honesty without tact is cruelty.