My daughter out-grew a pair of jeans and we made them into a little purse for her to carry around. It actually turned out really cute. I used old play jeans, but can't wait to recycle some cute disney ones when she's done with them too.
Step one: Cut jeans straight across at the crotch.
Step two: Turn inside out and sew across
Step three: I lined the inside and sewed it into the bottom and around the top. Line it by using a different fabric and basically sew a square about the same size, by leave the top open and slide it into the jeans.
Step four: Make a handle- either use ribbon and sew it on or use left over leg material (I made a braid with it) and sew it into the sides.
Step five: Add your own creative touch!