When my oldest was younger, I loved to think of ways to make homemade toys for her. Let's face it - babies don't realize what's homemade or what's from the store. Here are some of the things I did:
I took her picture in various color outfits (blue, etc.) doing something with an object of that same color - the blue was in a brushing her teeth with a blue toothbrush, orange she was wearing an orange shirt smelling a tiger lily, etc. Then, I got a 4x6 photo album at the Dollar Store and included big letters on each page that said the color. She enjoyed looking at the pictures and it helped teach her the colors.
I took a plastic coffee can and cut a hole in the lid big enough to fit plastic milk jug lids. I put some fun, colorful stickers inside the lids as well for her to look at.
I took the sticker off a 2-liter bottle so that dd could see inside. Inside the bottle, I included some fun visual stuff like tinsel pom-poms from the craft store, fabric scraps, and a jingle bell.
Now that I have a nephew, some of his favorite toys are also free or cheap.
He LOVES the box his car seat came in. It is his "fort."
With a little contact paper, they are now his "drums."
Maybe his favorite thing is his beach ball. Because this one is partially see-through, it can be used to play peeking games too.