So far I find the ones at Joann's with my 40% off coupon is the best for flour sack towels. Our store will let you use the store printed coupon and one on your phone at the same purchase. Some people make their towels - I have not tried it yet - the cost of fabric and time would be more than what I can buy them for. But you may want to open the packages at the counter to make sure there are no flaws.
For hand towels - terry towels - I have found some nice ones at Walmart. They have different grades of towel. But I made a few for kids with their names on them so didn't want to use the top quality towels that would more than likely be in a rag pile within a year. Now that I think about it I bought a few at Target too.
I went kind of crazy for those holiday embroidery patterns - they are so cute and I am so new to machine embroidery.