Over at Hacker Zen they have been wanting to make a pixel art t-shirt for a while. The problem is, they didn't have any materials for silkscreening, iron-ons, or anything of that sort. So they figured out a way to make exactly what they wanted using only a few household items and acrylic paint.
Here's how to make a Princess Peach shirt. You can adapt this guide to make any kind of shirt you like.