Lyn Mann Teaches a class using 'ugly fabric'. Here's the class description.
"1. THERE’S NO SUCH THING AS AN UGLY FABRIC.
In this this class, students will each bring squares of an ugly (or hard to use) fabric to share. They will also bring a variety of scraps. We will construct a simple scrap quilt while learning how to make any fabric great, depending on what you put with it. A really fun day!!! Many say this is the best class they ever had."
http://www.quiltsbylyn.com/workshops1.htm
I saw some of the quilts made in this class on Simply Quilts and they were gorgeous! There really is no ugly fabric. You just have to know where to put it.