I have done it with no problems on a throw and full size quilt. It depends on the sheet & the shrinkage factor of the materials used in the top. A used sheet isn't going to shrink at all so if your top wasn't made with pre-washed fabrics, it might get a little wonky on you after the first wash.
You actually want the cheaper, thinner sheets. The nice hotel quality will be a bugger to quilt through. It would probably work fine for machine quilting with a bigger needle just like batiks, though.
Flat sheets are about the right size to use for backing if you are making a standard size quilt since sheets have the drop and tuck built into them. If your quilt is larger than standard, just use the next size larger sheet.