I do think felted wool is a really beautiful option. I buy mine from Primitive Gatherings, which is near me, but they also sell online.
That said, felted wool is quite pricey. It's great for little table decorations, but otherwise it's a pretty major investment. For the quilt in my avatar I bought the fake stuff at JAF. It's 100% plastic, made from recycled milk jugs. It washes quite well & holds up to the beating my 2-year old nephew has put it through (I made it for him when he was born -- it's been used for tummy time, forts, cozying up with Mommy & otherwise just dragged around the house and frequently washed). You can do all the same things with plastic felt as with felted wool. It doesn't look quite as rich & luxurious, but it's still pretty nice.