craftgrrl | What can you make from really old clothes?

I would like some ideas on what to do with unthriftables, fugly-but-still wearable items. Can't donate em, don't wanna wear them and I have enough rags as it is.

The way I sort my clothes:
- Trash. Clothes with holes, stains and are completely worthless at a thrift store.
- Meh. Still useable, technically still wearable around the house but really not something that makes me feel fantastic in. Too worn to donate.
-Thriftable. Would sell at thrift store so I'll donate it :D
- YAY! Stuff I love wearing and make me feel fabulous when I wear it.

Then the gamut of needs-repair, unpaired socks, not sure if I hate it enough to get rid of it but it definitely isn't my first pick out of the closet...etc.

So what do you do with clothes you can't donate but have a hard time throwing away outright?