How about a dishcloth? And I don't mean just any garter stitch dishcloth, but one that lets you experiment with different stitch patterns. Tons of free patterns on the Internet, everyone can choose their own favorite. My personal favorite is the "your state" cloth, very handy for gifts when visiting relatives.
You can buy one skein of cheap 100% cotton for them, so the cost is minimal. The time investment isn't huge, and you have something useful that won't suffer badly from gauge issues.
Now, if you have those who have no use for dishcloths, how about burpcloths or bibs? It is easier than pie to knit a strap for the dishcloth, add a button, and voila, baby bib (buttonhole can be optional, depending on how loose your gauge is. Or go wild and sew in a snap set. Easy way out is a cute diaper pin.) Burpcloths tend to be a little bigger squares to cover the shoulder. (I've made several "Babyfeet" bibs---it's such a cute pattern!) http://www.knittingknonsense.com/babyfeet.html
And if those ideas don't float their boat, they can make 9 "squares" (dishcloths) for a baby blanket or lapghan, out of wool or acrylic or quiviut rather than cotton. It would be a good collaborative project, and very illustrative of gauge differences.
Hope this helps! Wish I'd known about dishcloths when I was starting out.