I bought a game today call Ji Ga Zo, for the reason that it breaks down a picture into various color blocks (that are graded) so that you can then put them together to make a picture. It was being clearanced and I bought it to turn it into a quilting program. My idea doesn't look like it is going to work well, though, because the picture will end up being 20 x 20 pixels, which for most pictures will not have enough clarity to be recognizable. However, I do think that I have a solution to that, too.
I'm going to demonstrate with a picture of the nerdlet after she cut her hair two days ago.
Then I used MS Office Picture manager to crop it so that there were much fewer details for my image to contain.
Next I used MS Office Picture manager to take out all the saturation. This is done by going back into edit picture and choosing color; then just slide the saturation bar toward zero.
Then I went back into edit picture and chose resize and resized it to 50 x 50.
Here is a photo of this enlarged (since I couldn't find a way that it showed the pixels otherwise).
Then to see the different pixels, I opened the new picture in MS Paint and zoomed in large enough to see it. I'm currently having Q look for a way for to order the pixels in some way so as to assist with the fabric purchases, but worst case scenario, this is definitely something that you can match to.