What a neat idea!
Cotton clothing is easily cut up and recycled into quilted projects, just be careful to not use any worn-out patches. I am currently making a skirt and bag out of a sheet, which probably sounds weird, but the sheet is so pretty and in good condition, no-one will know unless I tell them. (Sheets usually aren't good for quilting though, because the usually high thread-count can make them hard to quilt.) Knitted goods that have seen better days can be unraveled and re-knitted into small toys, or items to be felted. These materials can all be found around the home or at second-hand stores.
I hope these are the kind of ideas you are looking for! Good luck!
