Earlier quoted context omitted.
* Work on a pet project with a technology you always wanted to work with, get into flow and put it online. This will be the most fun and will give you tons of self-confidence in a very short time.* In addition to the personal mental benefits, as a hiring manager, I would look favorably on this. It shows initiative. It shows that you aren't wasting your time between jobs. Should your unemployment extend to a few month…
This is great advice. I'd like to add emphasis to the importance of creating something that is tangible and complete. The extra effort it takes to actually host and launch a web application or to release an app to the app store will go a long way to greatly improve the weight and impact of your project to your next potential employer.
Having anything functional will put you ahead of the majority of candidates I see (DC area, enterprise software, so def. not the same market as SV/NorCal or start-ups in general).