We use muslins. Ours are all yellow and so LO never notices if we switch them, which I do every couple of days. Do this so the smell is always freshly laundered and stays clean.
They are thin, great for LO's hands to play with. My LO holds it, throws it over his face, cuddles up to it and happily falls asleep with it pressed against his cheek. Once he is asleep we take it out of the cot and only give it back if he stirs in the night. Otherwise we leave it out, so he doesn't start to have it outside of bedtime in the cot.