What about an oversized log cabin? Put the 5" charms in the center & then build around it. It would make a nice lap quilt for them. Or if a lap quilt is too much, you could always just do 4 blocks & make a nice wall hanging -- maybe get the border embroidered with their name. For a lap quilt I would make the backing about 60" (1.66yd) and then use the rest of the blue for binding and maybe a border.