If they are ceramic, you might offer them up to mosaic artists via craigslist or a local art school. Or you can donate them to a thrift store. When I first got my own place, all of my dishes came second hand from the local thrift shops.
Instead of putting gravel or vermiculite in the bottoms, smash the mugs with a hammer and put the pieces in the bottom to lighten the soil and let the water drain out. The nice thing about ceramic is that it is porous, and will absorb some water and release it back into the soil as needed.
Someone asked about that on Metafilter recently, although they had some additional specific requirements: http://ask.metafilter.com/78493/1000-Useless-Mugs-Lets-Keep-them-out-of-the-Landfill
My entire kitchen wall is a lovely multicolored mosaic made up mostly of broken-up plates. That wall is what first made first fall in love with this house. So I second the idea of finding a mosaic artist, or breaking them to make something yourself. Grouting a mosaic is messy, but not difficult. On some level, it's just playing with mud.
Thrift stores are also a good idea. Some people might get a real kick out of logos and things that seem really mundane to you.
You could re-gift them by filling them with M&Ms (or filler of your choice), wrap them in a little tissue paper and a bow as a "thank you" or birthday gift.
I end up taking ones I don't like any longer to a thrift shop so someone else can enjoy them.
I second donating them to a thrift shop. Around here, if they're sufficiently attractive, Middlest makes candles out of them, to sell, but since you don't currently have a Middlest to take them off your hands, the thrift shop will probably appreciate them. A lot of thrift shops are for raising money for various charitable causes, too, which is nice.
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Date: 2008-01-03 12:20 am (UTC)We have lots of potted plants.
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Date: 2008-01-03 12:20 am (UTC)http://ask.metafilter.com/78493/1000-Useless-Mugs-Lets-Keep-them-out-of-the-Landfill
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Date: 2008-01-03 02:42 am (UTC)Thrift stores are also a good idea. Some people might get a real kick out of logos and things that seem really mundane to you.
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Date: 2008-01-03 03:24 am (UTC)I end up taking ones I don't like any longer to a thrift shop so someone else can enjoy them.
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Date: 2008-01-03 07:27 pm (UTC)