I want to say that 'critters' do love to eat starch, so I only starch what I will be using at that time.
I like to prewash fabric, that way you will know what to expect when you wash the whole quilt at one time.
Starching fabric before you cut it, helps to make a nice sharp cut. It also helps to make your stitches nice when you sew. Have you ever noticed that when you at a quilt store where they sell sewing machines, that they always give you a very stiff piece of fabric to test sew on? Why? Because all your stitches will look so much nicer. When your stitching lays flatter and your pieces fit together better, your quilt, as a whole, will look much better. Your points are on target, your blocks look more professional and everything just works better. This is just my humble opinion from years of experience. Of course, the disadvantage is that you need to wash the quilt afterwards because, as I said earlier, the critters love starch.
As for what kind of starch I use, I used to use the starch in a can, but it really messes up my iron. I now use the stuff in the bottle and dilute it to fit my needs.
@Marietta: I love your avatar about the Etch A Sketch. It had me laughing till tears came.