After quickly reading all the posts, my conclusion, under these circumstances, was what you just suggested to just have canceled the order. Bottom line you want to please all your customers and they are the ends to your means. On the other hand, you also have to run a profitable business in the most efficient way. At times those two objectives don't like to play nice together.
After one ignored email I'd be inclined to let them know their order will be canceled due to incomplete shipping instructions. (I wouldn't have cut the fabric before shipping just on account you don't know what she needed it for.)
Another poster commented something may have happened to the customer preventing them in some way from contacting you. Not be hard hearted but unexpected things come up with all of us but that's our responsibility not for someone we're doing business with to be our psychic babysitter. That would be up to you if they let you know there was some unforseen emergency that came up and got in the way as to what you may or may not do.
Sorry it became what it did but this helps you should you have to face this again sometime in the future.