It says "Naughty children deserve to be punished" - one of Professor Umbridge's tradmark sayings. It's embroidered in a french script with yarn that is actually purple (it looks a little black in this picture).
It makes me laugh every time I look at it. Special thanks to Stuart for the idea, and to my mom for the tea pot.
Knitters: I'll be posting the pattern here soon. You can have it free and make one yourself!