Muslin squares rock. My oldest was a 'muzzie monster' and loved them from the get-go. He's almost 5 now and they are still his version of a blankie or lovie. He has to have them somewhere near him/his bed at night and also when he's sick.
They are great for use as burp-cloths, general mopping up, napkins, even cloth diapers. I bought white ones and tie-dyed them. Even when my son finally outgrows them, I'll still use them for dusting, etc.
LOVE them!