The ugliest thing I ever knitted was this terrible pair of slippers for my sister. She showed me a pair that my grandmother had knitted for my grandfather (which were pretty ugly, too) and wanted me to make them "just like that!" I told her to go pick out some yarn and she came back with Homespun.
I guess I should have gone with her. Anyway, I ended up double-stranding the Homespun, which was in a wholly unnatural purple/brown/green colorway with a pink wool. They were hideous!
Needless to say, she loved them.