Damp towels! Heavens above no. Quickest way to develop to develop some sort of Victorian ailment on your bronchials and a nasty consumptive cough.
Ikea folding pillows sound excellent and probably identical to my Coleman camping pillows that I splashed out on in a moment of euphoria after getting a 20% reduction on my deeply snazzy sleeping bags, thusly negating any bartering savings I actually made.
What I have been making are sleeping bag liners/self inflating mat covers and MATCHING pillow case covers with my mothers 50 cubic tonnage of winceyette pastel striped sheets (you know the type - ALL our mothers had them in their trousseau in the days before duvets) that she had safely stored away for the last 35 years.
Proper liners they are to with fold down frontage so the back section can tuck away into the hood section of your sleeping bag while the front section folds down and over the front of your bag to maintain cleanliness from stray night time dribbling.
On top of that I have made 4 thermal fleece liners which are so very versatile and awesome that I hesitate to call them liners. I have lovingly sewn (my mother also assisted) Velcro patches on them so they can be opened as a single blankets, joined together as a double fleece liner, used sans bag with winceyette liners as a summer evening bed covering...oh the list of uses is endless. A veritable smorgasbord of campsite bedding choices.
They also have fold down flaps.
I will be photographing them next weekend in all their glory.
I am on thrifty camping smuggery level 11.