Perhaps these fears are unfounded. But there is a lot of social etiquette around gifts, especially those hand-made. Personally, I love when things are homemade, and appreciate the extra effort and thought that goes into these gifts. Very few have been total duds, and even these I find a way to make use for. But, who wants to spend all of their time knitting (and it is a terribly time-consuming activity, as much as I love it) only for the finished object to be a disappointment?
website has a collection of charitable causes to take on. Loving Hands organizes group charity knits and drop-off points for donated knits. The number of causes that knitters and crocheters can support is tremendous, and leaves a lot of room for creativity. Children's charities love stuffed toys of any shape or size, scarves and socks are ideal for interesting repeating motifs, and if you want to make something I'm guessing you've never tried before, there are the famous knitted boobs.
I wildly admire those generous folks who are the opposite of me, i.e. they mostly knit for charity. And there are plenty of those type of do-gooders about.
My new knitting ground has taken on the project of knitting jumpers for newborns in Swaziland, who are often sent home from hospital wrapped in newspaper. One of our group members, a midwife for the NHS, visits a hospital there occasionally on sabbatical and donates her skills. We hope to donate our knitting skills as well, with as many jumpers as we can manage before November. Hopefully her luggage can stand it!