Justin over at materialicious passed thin onto me recently. It’s a web page by a guy named John who is pallet prolific and has a nice long web page filled with photos of pallet projects.
There’s even a nice series of construction steps as one little shed came together. It’s a good example of what can be done with pallets. The pallet shed pictured was built by Tony from Arab, Alabama. Visit John’s web page.

If it were me I’d raise it up off the foundation with one or two rows of cement blocks. It would help keep the wood dry when it rains with a lower propensity for rot and eventual insect damage.
Peopleunit said… “raise it up off the foundation with one or two rows of cement blocks”
Absolutely! Wood and the ground should not make contact if at all possible. Termites and rot are the main reasons. If a trailer is not available and leaving a pallet shed/house in one spot is acceptable then do what you can to raise it off the ground.
In some cases gravel, rocks, or even rail road ties would work. Rail road ties are treated with creosote, which is not very nice stuff but blocks the bugs. Rail road ties would be my last choice. After a trailer, concrete blocks or rubble would be my first choice.
Thanks!
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Keep in mind that most pallets are treated with a heavy-duty pesticide (Methyl Bromide, or something like that). In fact, if you’re going to use your pallets for stuff like compost bins and the compost would eventually be used on vegetables, you might want to check out the pallet garden woman’s web site for labels to look for: http://lifeonthebalcony.com/how-to-turn-a-pallet-into-a-garden.