I like to knit baby blankets for charity. There's a crisis pregnancy center not too far from here that always needs blankets, sweaters, booties, etc......... for the little ones.
Or you could always knit a blanket of squares in different stitches. Each square could be a different stitch and sew them together to make lap blankets for seniors or veterans.
I'm always on the look-out for yarn at local yard sales or on Craigslist so the yarn I use for these doesn't cost very much. PLUS I sometimes get FREE yarn (the best kind) from friends!!!
Just a few more ideas.