I was shopping for a dining room table and stumbled upon the perforated roll of cotton placemats+napkins. Very interesting idea! Instead of tearing off a sheet of paper toweling, you could tear off a cotton napkin that can be reused and washed at least six times. They are meant to be limited use, so you can take them anywhere from a picnic to the office lunch room.
After you have used and reused the napkins and placemats a number of times, you can simply recycle them (they are biodegradable). The napkins and placemats come in a roll of 12 and are offered in many different colors — both bright and neutral. They can be purchased at A+R for $28/roll.
I may just have to pick up a few rolls!