This is a simple project that has been around for a long time. My kids have knotted blankets that my sister-in-law and nieces made for them when they were younger. Now Wal-mart and some of the fabric stores carry easy kits with the pieces all pre-cut for you. We happened to find this "Toy Story" kit, and I knew he would love it. The kit comes with the printed piece of fleece and a solid (red, in this case) piece of fleece for the back. You trim the image and trim the other piece to the same size, cut about a 4-sq-inch square out of each corner of both pieces, cut fringe all around the edges, and begin tying the fringes of the two pieces of fleece together. This particular kit even had dotted lines where you cut the squares and fringes, so it couldn't be easier!
When we were done, we had a nice, reversible blanket, and one very proud little boy!!!
Scroll down my blog to see the ponchos my girls made using a similar kit.