I always use flannel for all the layers because it makes the "rag" fuller. If you use batting (cut the size of the square -seam allowance) then you only have two layers of fabric to actually ravel! useing the flannel for all layers also saves time because I can cut all the blocks at the same time. I layer the fabric the way I will sew the blocks with the back on the bottom and work my way up. I then cut the blocks and I don't have to worry about matching all the blocks up later!
If you DO choose to use batting for the center instead of flannel I would use something like warm and natural!