We stocked up on both, but ended up going out and buying loads of tea-towels in the January sales (much better for reflux, looked a bit daft using santa towels in summer though ). Buy a few of each, and buy more once you have more idea of what you'll need.
I should say that bibs is better than muslin squares. When your toddler starts eating then you should wear her/him a bibs because muslin squares are only useful when your baby is still breastfeeding. I always use bibs because it is more efficient than muslin squares. If you use muslin squares can be pull off easily by toddlers unlike with bibs. In fact, bibs are more helpful in terms of messy eaters problems. I used TPE baby bibs for my toddler now and I could say that I love using them.
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