We tried straw the first year of the dog yard and one of my girls ended up at the vet with an eye infection. After that I knew I couldn't use the straw so I checked into mulches and chips. The pine chips are by far the most cost effective at 4.98 a bale from Tractor Supply. I don't know what they would run at other places. The cedar chips are more expensive and come in a huge bag but we only use them in the flea season. If anyone decides to go with a mulch DO NOT USE COCOA MULCH! It is toxic to dogs.
My crew has a doggie door they can use all day. Once the pine chips went down the muddy paws disappeared. For a few days after the fresh chips are down we find a couple chips on the throw rug inside the dog door but I'd rather that than mud any day!