I needlepoint. Years ago, I made coasters and gave them to various friends. All my friends still have them, and they're in pretty bad shape. So I was inspired to make new ones. I've made somewhere around 50 think?
Materials: plastic canvas, each sheet is cut into 4 coasters, and is $1 per sheet I think.
Yarn - I got a needlepoint kit for Christmas, I will totally do the canvas but didn't want to use the included yarn. So I used that yarn, and also got a bunch more from my mom (who has 3 large bags of yarns).
Felt backing - bought at Joanns, on sale. $10-15 I think.
Patterns - all free. I had a few, found some online, created some from pictures and graph paper, went through my mom's pattern binders.
I already have all the tools needed - needles, scissors, thread.
These will be gifts for all my friends for Christmas. I'm basically done with the needlepoint part and need to sew on the felt backing. Then will probably take pictures and let friends rank ones that they like. There's a ton of patterns and colors to pick from.
If you knit/crotchet - dish cloths sound like a wonderful idea to me. And even better you can probably use up odd yarn.