these neat cotton monogram pillow covers by Threshold. The backside is done up in a pretty coordinating lattice print, and besides letters they also had an "&" (ampersand) symbol. Best of all, they run just $16.99, which is a much better price-point than Pottery Barn's version (which you order to be monogrammed and will set you back $39.50 each).
Now for the bad news: they don't carry every letter in the alphabet, and these seem to only be available in stores (and not for purchase online). Furthermore, each color (Blue, Gray, Tan and Yellow) only comes in 3-4 letters... so if you're looking for a blue "B" you're out of luck, as B only comes in yellow.