Well since I have a bunch of fabric laying around that I haven't been using I decided to make one of those pillow case dresses that are so popular right now. I found a tutorial on youtube that was very helpful, here is the link
I did modify the directions a bit to fit my little one who is a skinny minny. I also used bias tape instead of the fabric around the arm holes. I think it turned out great and can't wait for her to wear it out.