I always try to salvage what I can. One of my favorite things to do is make tote bags out of "mistakes." They're handy to have around, easy to make, and often turn out a lot better than I thought they would. Pillows are another great option.
I'm philosophical about a quilt not working out. I've learned more from the pieces I screwed up than the ones that came out well. It's all part of the process.