Do you remember when I brought home these Ikea dishtowels?
They were about $0.79 each. I bought them with the intention of making Christmas pillow covers out of them, and they worked wonderfully! To make your own pillow covers, you'll need 2 towels for each pillow. I forgot to take pictures, so I've made a little diagram for you.
After cutting the pieces, flip around the pieces from towel #2 so your finished edges overlap in the middle. Lay your square from towel #1 over the towel #2 pieces (right sides together), and sew around the edge with a 1/4 inch seam. So easy!
They also look very similar to Pottery Barn's Grain Sack Stripe Pillow Cover ($29.50 each), but for a fraction of the price.