I think it's a wonderful thing that you want to do for your nephew.
Maybe you could make a rag quilt. You could use a variety of prints, it would be quick and easy, and it would be soft snuggly for him.
How old is your nephew? Do you have a cap that your dad wore or even a shirt he could wear as a nightshirt? My mom gave one of the grandsons a parka that dad wore alot and it meant the world to him. It gave him a feeling of closeness to his grandpa and that sounds like what your nephew might need.