The term t-shirt is a short form for tee-shirt. This name is given to tee-shirts because of the shape of the clothing when laid down flat (it looks like a T). In the US, tee-shirts(or t-shirts) are normally known as tees. same thing!t-shirt.
T-shirt bags also know as tee-bags are quite popular,you can find all the instructions here http://wildonionstudio.wordpress.com/2008/06/01/tee-bags-a-tutorial-to-recycle-a-tee-shirt-into-a-shopping-bag/