I found that many of the quilting blogs I follow use this term. I found this definition on about.com
Definition: Quilters have tagged a unique meaning onto the term UFO. They're not objects flying around in the sky (unless we toss them around because they're so ugly). A UFO is an Unfinished Object--the remnants of those quilts we start to make but never seem to finish.
You'll find UFOs tucked away in the bins and baskets of nearly every quilter. But we're not the only generation of quilters who have accumulated them. Look for vintage quilts on eBay and you'll find blocks and quilt tops from lots of eras--UFOs that find new homes and finally get finished--or stored away for the next generation.
I'm on mission to finish several UFO's before I start something new. I'll post my unfinished projects later tonight.