I made a twin sized blanket for my niece out of Homespun and her mom tells me that she loves it and that it washes well. I haven't heard anything about pilling, but it did unravel once and she reknotted the end and didn't have any more trouble. (No fringes though.)
I'm currently making a smaller thow out of the yarn I had left over (and I'm on the last skein but only half done! How did I manage to miscalculate twice?) and I haven't had any problems with it yet. However, I am crocheting it, not knitting it, and maybe that makes a difference as far as working with it? I love working with it!
This has been an interesting thread and I will have to be sure to ask my sister-in-law if they are still using that afghan. (It was my first -- and only -- that I ever finished. I've always been embarrassed to ask about it because I've been afraid it wouldn't hold up. I almost died when she told me she had to retie it!)