Cotton Kings Sultan, Sultan Deluxe, and similar 100% cottons by Hobbii such as Dahlia Mixo, are some of my favourite yarns for making napkins. They come in a stunning array of solid and ombre colours, and are fine and absorbant. Click here to see some of my napkins made with Sultan Deluxe, which is the softest of these and my preferred napkin yarn.
Rainbow Cotton by Hobbii
This is another fine, lightweight cotton by Hobbii which is great for napkins and very lightweight placemats. It comes in an overwhelming array of solid colours and is a highly economical choice.
Cotton Pure from Purl Soho
This is one of absolute favourite cottons. It is unmercerized with an extremely matte finish, but is still machine washable and durable. The colours are very slightly heathered for a natural, textured look. This is an organic cotton and is a little pricier than some, but it comes in massive spools which are more economical. Some might consider this yarn too fine for something like a placemat but I disagree.
This is a fun, inexpensive crafting cotton. It's about as bulky as I like to go, and I do prefer finer yarns for decor items like placemats, but Sudz is great for dishcloths. It stays soft after repeated washings, unlike some of the other worsted craft cottons out there. The self-striping creates beautiful colour effects when worked with textured stitch patterns like Tunisian honeycomb stitch.