i just made one with two fabrics and alternated the colors. it was just squares but looked great. perhaps you could make sqs but arrange the fabric squares going in rows diagonally across the quilt. that looks good too. look in photos here for rag quilt photos.
here is one someone just posted-it has more than two colors though but you can see what i mean.
http://www.quiltingboard.com/picture...B-t203735.html