It's a tough question - I still have my "pinkie blankie" - a white and pink quilt my grandmother sewed for me, with hand-embroidered kitten faces on the blocks. I used that quilt to death as a kid, it was patched and repaired many times and the entire back was replaced at least twice. Now it's reached a point where the fabric just falls apart if you touch it and there's really no way to salvage any of it. But it feels wrong to just throw it in the trash - that "blankie" was my "safety blanket" and helped me through a lot of bad times when I was small.
I have recently thought I should take it to our family property and bury the quilt in the area where we scattered Grandma's ashes. I feel like it deserves that level of respect, and being all-cotton it wouldn't be bad for the land.
My cousin still has his "blankie" too - his was a blue crazy quilt, and his was also patched a million times, but being a crazy quilt it's harder to tell, and having more layers has helped his stay "alive" longer. He can still point out which of the pieces are from the original quilt, though!