I have seen some great flannel rag quilts and love how they look!! Maybe you could try that out.
Here is a link to a pinterest board that has lots of really cute rag quilts:
http://pinterest.com/fruitfulmomma/rag-quilts/
I think they're a good choice for kids cause they are 3-D and they have something to touch and play with as they are snuggling with it
