I recently made this dishcloth for my MIL for her birthday...she lives in Iowa and her kitchen is mostly blue. It's kind of hard to see in the picture, but at the top is the state of Iowa, and underneath it says "IA".
She seems to like it. (And it was a quick enough knit that I wouldn't have felt too bad if she didn't like it. She's not a knitter. I would have just chalked it up to practice.)
Here is the pattern.
I increased the border to 6 rows of garter stitch at the top and bottom, and K5 at the beginning and end of the other rows. I used light blue Sugar 'n Cream.