I work at a my LQS. We don't have time to wash fabric for our samples so I have never prewashed my fabric... too much of a hurry to get quilting! I will check red fabric (I snip off a piece and soak it in a white bowl of water)if it is going to be next to a white in the quilt.
I rarely wash a quilt before giving it away but my friend always washes the finished quilt becuase one time the person she gave it too was afraid she ruined it after washing it cause it got all puffy.
I do recomend to quilters that if they buy fabric at Wal-Mart or Joanns to prewash. It has a different smell to it and we can always tell Quilt Store fabric from the other... and I don't trust it not to srink. That is just my personal opinion and yes I do buy fabric from Wal-mart and Joann's...I can't resist fabric from anywhere!
I don't prewash fannel because it loses is sizing and then it's difficult to work with. I would prewash it if is going just on the back of a quilt because it will srink more then regular cotton.