In an attempt to reduce our use of paper products, we've been using Flour Sack Towels in place of paper towels for a couple of months now.
These towels are wonderfully absorbent, can be laundered with a bleach alternative to keep them white, and wash and dry up great. Click here to check them out on Amazon.
I read about a family that replaced their bath towels with flour sack towels as well. They did so because their reduced size meant less water spent in washing them and they line dry quickly, reducing dryer use. We haven't yet made that switch. I rather enjoy wrapping up in my big cozy towel, but we'll see. Maybe in the summertime I'll give it a try. :)