We have always used cloth napkins. The paper ones are for "looks"- same with the paper towels. My family knows I cringe when they use something that has to be thrown away. They all know how to use the cloth napkins and my daughter delights in folding them in different ways to make the table look special.
Oh- paper towels- they are only allowed a half a sheet. I especially don't like them being used. They even joke about it- quick use it before Mom knows you have it!