My husbands step mom is a avid knitter. At the time I was pretty new at knitting. She was telling me about what she did with all her gauge squares was to save them up and when she had lots of them she made quilt afghans out of them and then used them or gave them away as gifts and they were a popular item to get too. I didn't appreciate the advise at the time but I sure do now... Because of all the colors and textures it makes some really neat afghans. You could even make throws, shawls whatever :muah:
Hope this gives you some idea's on what to do with those darned gauge squares!