Over at 1d30, there is an excellent post on making magic items.
Make Your Own Magic Items
Things I like about this:
On the fly magic item creation - I like the idea of taking found items and making them effectively magical. This can be done as a temporary effect - make something effectively awesome out of found stuff, but if you want it to stick around long-term, you may need additional magical effects/special efforts to make it permanent.
Think of this as not only giving players a chance to affect the game world, and be rewarded for cleverness. Attaching conditions to keeping a one-off home-made magic item allows the GM to say "yes" freely knowing if it turns out to be too powerful, he can take it back later. That spiderweb rope of entanglement? Maybe it wears out quickly unless you throw Permanancy on it (D&D) or perhaps invest some energy into it with Slow & Sure or Quick-and-Dirty enchantment (GURPS). Or perhaps you need to invest other magical items (pour a special potion over it, grind up a powerstone over it, etc.) or go to a special place (dunk it in the Well of Power, sanctify it in the Cathedral of the Good God, have it touched by the Crazed Enchanter of the Woods) to get it to stick around.
Ingredients - I like the idea of special ingredients from monsters. This idea goes way back (look at the DMG for 1st edition AD&D) but it's pretty common in GURPS, too, so it's easy to steal. The eyes of a beholder might have a reserve of magical enchantment power. Perhaps the horns of a dragon, the blood of a hydra (poisonous, if Heracles's story is to be believed), the wings of a bat-demon, the slime of a gelatinous cube, etc. have a certain amount of latent magical power. Combine enough of the right ones and you've got a power pool to enchant a new item. Perhaps you can split it up - 50% power from the enchanter PC, 50% from an assortment of special equipment, magical wellsprings, and ingredients from appropriate monsters.
I've touched on this obliquely in my posts about skulls and heads, too - monster bits can be magic items. If a beholder's eyes are charged wand-like versions of the monster's attacks, maybe you won't stab its eyes killing it. If a medusa's head works as Perseus's story demonstrates, you probably don't want to reflect her gaze to deal with her. And so on.
I found that post very inspirational!