Of course in the ideal world we wouldn't be dealing with issues around plastic bag disposal in the first place, but given there are still plenty of them about (!) how about some innovative ideas for re-using bags for knitting or making jewellery?
Just a few ideas here from a quick search on google / YouTube - I'm sure there are plenty more:
http://www.youtube.com/watch?v=1o4jIUcSo8g
http://www.dailymail.co.uk/femail/article-450744/Knit-shopping-bag.html
http://www.youtube.com/watch?v=wJQhDj_jiRo&feature=related
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