Everyone has old sheets and pillows laying around. If you're a dog owner and you've got a sewing machine, it's really easy to make an excellent dog bed. The flannel dog beds shown here are 27" x 35", hold two pillows, and all you need to buy is a zipper. The blue bed in the corner is a bit larger and was made by a friend of ours. She originally had it filled with cedar, but we put pillows inside.
With flannel sheets, the bottom sheet will wear out long before the top sheet does, so use the top sheet for the project. It's easiest to cut two large rectangles out of the sheet, adding at least an inch all the way around for the stitching. Sew the two sides of the zipper first, zip it up, turn it inside out, and sew the other three sides and the area on either side of the zipper. The only tricky part is the sewing near the zipper ends. You may want to consult an expert or check out your local used bookstore for a sewing book. Velcro is probably easier.