I can't remember what I did with them last year...probably used them as burp rags or something. This year I decided to get fancy.
Step one: get a pack of mini-clothespins and clip them on something (like a box of popcorn for instance) so your kids can paint them in festive colors.
Step two: when all three of your Christmas greetings have arrived, find somewhere to clip them up with newly-festive clothespins (like on the blinds if you don't have any cumbersome valances in the way). Voila!