I may be a little late on this but, did you know that there are several companies out there selling fabric you can print on? I posted a picture of C. Jenkins Miracle Fabric Sheets because it was one of the few printable cotton sheet products that I found, that had examples of use over the web (see a little lower) and were also washable after printing.
Here are two pictures I found of Miracle Fabric used on the Craft Chi blog.
A customized table cloth and
The only thing I can see there being a problem with is COLOR. If you've ever tried printing a colored image from an inkjet printer on matte paper, you know exactly what I'm talking about. Inkjets work best with semi-gloss to glossy paper and anything else just looks flat and dull. So just to be on the safe side, I wouldn't print colored photographs if I were you. Things with flat colors and contrasts would probably work best. The possibilities are endless!
Check out the sites and blogs below for other possible uses for fabrics:
book display http://www.ohdeedoh.com/ohdeedoh/february-jumpstart-2009-entries/how-to-make-a-hanging-book-display-megans-february-jumpstart-project-2009-077231?image_id=3151
camera case http://amyalamode.wordpress.com/2009/01/28/cozy-camera-case-tutorial/
pencil bag http://craftlog.org/craftlog/?p=2469
buttoned legwarmers http://laupre.wordpress.com/2008/02/25/tutorial-easy-buttoned-legwarmers/
P.S. I put my blog url in to Wordle and got this:
P.P. I'd like to thank Tenaria, Danny, Ian, and Janet for helping me meet 60% of my sponsorship goal for the Walk MS event happening April 19, 2009 in New York City.
more Walk MS info