Perhaps the best use of coffee grounds is to include them in your compost pile. The "brown" stuff in your pile (dried leaves and garden debris, sawdust) will counteract the acid in the grounds and you'll end up with a rich garden amendment. One more note: Used coffee grounds sprinkled in a circle around vulnerable plants will deter slugs, snails and other pests.
Recycling coffee grounds
Using spent coffee grounds in the garden is a great way to recycle waste -- either from your own coffee pot or from coffee shops (Starbucks gives away its used grounds). But don't go overboard. Coffee grounds are a good source of slow-release nitrogen, but are also acidic (3.0-5.0 pH). When using them as a side dressing, concentrate on acid-loving plants such as blueberries, raspberries, rhododendrons, azaleas, hibiscus, begonias, caladiums, impatiens, gardenias, citrus (in pots), heathers and most conifers. You can also add them to many houseplants (African violets, peperomia, dieffenbachia ).