I don't use Wal-Mart fabric for my quilts. I do use their fabric for lots of craft projects, crayon rolls, purses, kid's clothes, etc. I give quilting lessons to my co-workers, I will tell them to buy what they can afford. Many of them buy fabric from Wal-Mart and that is ok with me. We all need to work within our means. If I'm making a quilt for a child that will get drug around, I think Wal-Mart is a great option for fabric.
I buy a lot of flannel at my Wal-Mart for baby projects. Yes, they have had inferior flannel but what I buy is from AE Nathen. Their flannel selection isn't as large but the price is right.