I found myself with time to kill yesterday, and spent a couple of hours browsing the craft books section in Borders. This book just jumped off the shelves at me, with a fantastic mix of craft projects, cooking, home-making ideas and gardening. It's called "Homemade: Gorgeous things to make with love", by Ros Badger and Elspeth Thomson.
There are so many amazing ideas inside this book, you could spend hours trying them all out. It's divided into sections for the four seasons, and the projects go along with this theme. I particularly loved a decorating idea for a patchwork wall, using wallpaper scraps or postcards. There's also a fantastic bag, made using old clothing labels sewn together in a patchwork design. The lining is created with the front of a shirt, and the buttons and buttonhole band form the fastening at the top of the bag.
If you're looking for inspiration I would highly recommend this book. It's whole philosophy is based around recycling, thrift and imagination, and there are plenty of projects that you can create with children as a family. The crafts covered include knitting, crochet, sewing and painting, so there's a little bit of everything.