Don't forget fleece throws for kid blankets. They're very inexpensive, soft and cuddly, washable, and usually already blanket-stitched around the edges so it's easy to work a shell stitch or other fancy border. You can find them in all colors and many cute kids' prints. I've seen people put pockets on them for teddy bears, turn them into "quillows" (where you sew a pocket on the outside for the blanket to turn into when they have to carry it), put zipper pockets on them so small toys or other personal items won't get lost...there are many, many possibilities and they work up really quickly whether you're knitting, crocheting, or sewing. Two make a sleeping bag for an older child or small adult. One folded sideways will work for a toddler.
Also, most fabric stores' remnant bins will have fleece cuts of right around a yard in their remnant bins. Since it's generally about 60" wide, that's already the right size. Blanket-stitch a foundation row and go from there--ruffles, shells, or what have you.
Remember, these kids are shuffled around a lot and facilities throw everything in the washing machine on Hot, so wool or delicate yarn is not a good idea. Think sturdy.