I would see what they have registered and just buy something. If it's not made with love as a gift, it's not worth doing, IMO. Besides, probably the feelings are mutual, and it will be unlikely that the parents will be duly appreciative of your work. They might just stuff it in a closet if it doesn't go with their decor.
If you do want to make a rag quilt, I wouldn't bother with prewashing. I think you get more of the raggy effect if there's some shrinkage.