I bought a white sheet this past weekend as a backdrop and then stumbled onto a photo somewhere that used a piece of white nylon in the background but with the strobes behind it, shooting into it. It's basically a huge Softbox. I drape it up between two cabinets and point the 580EX-2 into it (from behind the sheet). I use my Cactus remote trigger to fire it, and play with the exposure. The sheet is wrinkled as all hell, the trick is to either a) Iron the damn thing or b) Overexpose the hell out of the sheet which acts as a digital iron. I opted for the latter.
My next purchase will have to be a softbox, after checking out Clayton Bozard's Flickr Stream I am left wanting a Softbox.