Over on the dpreview forums John McCormack describes making a flash diffuser from a transluscent film container (the kind sold with Fuji film). He just cut off the end, cut a slot lengthwise, and puts it over the pop-up flash of the Canon S1iS.
I tried the same, but from the handle of a plastic milk jug. Two sissor cuts removed the handle, and then a third slit the handle lengthwise. The problem is that the milkjug plastic is thin, and so tends not to stay on the flash. I cut out a couple of offsets to make the "diffuser" stay in place better.
Testing it, I found that the diffuser reduces shiny highlights induced by direct flash exposure, as well as added a warming, light-mocca tone to the photographs. I am guessing the coloring is from the compsition of the plastic. It might be worthwhile testing other kinds of translucent plastic to determine their color effects.