One of the best ways to recycle shower curtains is to use them as a picnic or beach blanket. (This won't work with vinyl, only fabric) Think about it. They are nice and thin, making them easier to lug around than a bulky blanket, and MUCH easier to wash! They are a pretty decent size, but they will dry quickly, which is great if you use them at the pool or the beach! Just grab hold of one of those old shower curtains and throw it in your beach bag!
Another great use for them is to use them as regular curtains. In fact, I have them hanging in my bedroom right now! In my case, the sheers are actually shower curtains. You can use any see-through shower curtain as a sheer, but there are tons of styles that will work as drapes, too. One of the best rooms to use them as drapes is in your child's bedroom. You can get some really cute kids shower curtains to match just about any theme you can think of. And you don't have to stop there. Get the matching garbage can and bathmat, too! These items do not have to be limited to the bathroom.
Shopping online is a great way to find what you are looking for. Just browse through http://www.kids-shower-curtains.com and you will get some great ideas! You will be surprised at what would actually work for sheers or drapes in the rest of your house. For the "sheers" in my bedroom, I just wove the curtain rod through the ring holes in the top of the shower curtain. But you can use rings or hooks to attach a "drape" to the rod. This will also add an element of design.