was just going to come on and suggest the Ikea ones but I see someone already has - I use the green hooded ones for 7, 4 and 1y old! Way better than the baby ones - definitely bigger and more of a wrapping up shape.
I'm the least crafty person ever, but I managed to make DS hooded towels out of a bath towel and a hand towel. Cut about 2/3rds off the width of a hand towel, use a sewing machine to sew it in half to make the 'hood', then sew that along the middle of one side of the bath towel.
I made 3 of these (we had stacks of old Christy towels that were faded, but still cuddly and soft) when DS was a few months old, as he was v tall and quickly outgrew the baby ones. He's now 3.5 and they're still going strong, despite being used every day. Only slight caveat is be careful if you're dying them - I did and as they were almost white I thought a sunny yellow would look nice - which it would have done if they hadn't started out as a v pale blue. As it was, they ended up a swampy greeny/yellow... which I've learned to tolerate love over the years.