It depends on the look you are going for. If they are furry animals, I like to just do a small straight stitch line about 1/8 to 1/16 inside the applique. This lets the outer edge fray adding to the furry effect. If it is an applique I want to stay really crisp, I do a satin stitch. The only other stitch I've done is the buttonhole with a thicker thread and I like it too. Try out some samples and see what you like best.