A friend of mine started this business in NYC. It's really awesome. I'm testing it out myself this week (just ordered the mailer).
Basically you send in an old bridesmaid dress (for free with their mailer) and receive a credit towards one of their new LBD's. I'm getting the satin silky one.
Here's the website and more information.
Re: Need a new LBD? and want to get rid of an old bridesmaid dress at the same time?