Well you learn something new every day! I found this on a quilting site:
http://lequilts.com/?page_id=38
Can I keep my quilts in a cedar chest?
Cedar, along with other woods, secretes oils that can damage fabric. If you must keep your quilts in a wooden container, it should be sealed with a protective coating of polyurethane varnish, then lined with unbleached, washed muslin or acid-free paper. Metal containers should also be lined with this muslin or paper.