I have noticed excessive fraying even in some of the more expensive fabrics. It doesn't seem to be directly related to cost, but in some cases to weave. The Kaufman Kona black fabric I bought, for example, is a good quality of fabric but frays much more than I like.
For at least some applications, starching fabric will prevent the stretch problem. I always heavily starch backing fabrics before layering. I also sometimes starch fabrics before cutting to piece. Flannel stretches terribly; heavily starching it before cutting makes it much easier to accurately piece.