Well how stinkin' cute are these handmade stuffed felt letters and numbers that I came across on Etsy?! I may have to get a set for my daughter as a Christmas gift. She's way too young for them but I can't resist.
You can even buy individual letters for $1 a piece. There are lots of fun things you could do with these. Attach them to the top of a wrapped gift for a birthday present. Mount them on the door of each child's bedroom. Sew them to felt stockings for the kids to hang over the fireplace. Make them into Christmas tree ornaments for a kid's tree. I'm not that crafty so I'm sure you creative types can come up with even better ideas. Do share if you think of something clever!