I just love this cute felt Tooth Fairy Pillow from Larissa at mmmcrafts. It was really quick, easy and fun to make. Instructions are given for additional embellishments (like a skirt, crown and fairy wings), but I decided to keep mine plain and simple, partly because I ran out of time and partly because I wanted to keep it gender neutral so my son will also be able to use it when his time comes.
We've had fun using the pillow. When my daughter loses a tooth, we carefully place it in the mouth of the pillow, which is then hung on the door knob on the outside of her bedroom door. Next morning, we wake up to find the tooth has been replaced with a coin! I'm sure the Tooth Fairy appreciates not having to sneak into the sleeping child's room and fumble around for a tooth, especially on a Friday night when she has probably shared a bottle of wine with Mr Tooth Fairy ;-)
If you would like to make your own Tooth Fairy Pillow, the instructions and free pattern can be found here. I have noticed that since I made my pillow, Larissa has posted a small amendment to her pattern, suggesting some top stiching around the mouth will stop the mouth stretching so much with repeated use (you can see in the picture above that mine has stretched a bit).