You are right, the stretchier material should always go on the bottom.
Another thing is, if you are using thinner material and cutting strips you should cut the length of the material for length of the strip. For instance, you are cutting 2.5" by 8", you want to cut the fabric 8" wide and then take your 2.5" out of that strip. You do this because the length of the material doesn't stretch as much the width.
Let me see if I can say that more clearly, the salvage edge of the fabric (length) does not stretch as much as the width of the material. You want to cut the long piece from the salvage side.