Well, in the case of my child, she only outgrows them in length. They still technically fit in the arms and waist, so why not continue to use them if you can?
I know a lot of people who cut the feet off of them to get a little more use out of them, but for our cold climate, I think a cardigan makes more sense.
Do up all of the buttons to ensure an even cut.
Cut right above the bottom button. This will allow you to have room to fold up the edge.
As you can see, I had to re-cut this one, as I cut it in the wrong place - putting the existing button right in my way.
Fold over the edge, and sew in all the way around.
You do not have to be an expert sewer to do this... remember, it would have been recycled into rags or given away, so you are not losing anything if you screw up.
Perfect for those unpredictable weather days!