Copy Paper
This is a sheet of regular printer / copy paper. This is probably the best bang for your buck - it does a really decent job of diffusing the lights for practically free.
Paper Towels
In a pinch, it's easy to grab a paper towel to diffuse your lights. The quilted texture makes a fuzzy look which is actually pretty interesting. They're inexpensive, easily available, and will also keep your spilled coffee away from your project.
Parchment Baking Paper
Parchment baking paper comes in a long roll and is around 18" wide. It's a surprisingly good diffuser, giving a slight textured look to the LEDs. Hold it a few inches away and you get a Japanese rice paper-type look.