The 4 of us have a bath towel each - they are hung up to dry as soon as we get out of the bath or shower and so never get smelly. I wash them once a week, or sooner if I notice speck of blood (see below!) or something.
Am horrified at OP's DH - what a waste of effort, time, soap powder, electricity (and towels probably - imagine they get totally worn pretty quickly.) I think he must have some OCD type issues.
To be honest, WhereWolf, I can't imagine sharing bath towels with someone else, would NOT like the thought of my DC sharing my towel when it's my time of the month! The odd blood streak (sorry, TMI) appears on DH's towel occasionally too if he's cut himself shaving, or [gross emoticon] he's burst a spot on his back rubbing it dry!!!! (not that he's covered in 'em - just on the odd occasion, I meant). And just to gross everyone out even further, I've had thrush in the past, and the thought of someone sharing my towel after I've wiped down there makes ME heave, never mind what the other towel-user would think!
My DH was brought up in a household of 8 people, all sharing the same handtowel, and probably a couple of bathtowels between them. And same flannel for everyone. The thought of the flannel in particular makes me wretch - his nan probably used it to wash her armpits, his dad could have washed his crotch with it, then the next person washes their face. BOAK!!!!! I've had to stay overnight at their's in the past, and had to ask for a towel of my own, as the first time I tried to dry my face one morning on the one hand towel, it stank of tahini sauce from his brother who'd come in pissed the night before and obviously used it after eating a kebab. It's just totally, totally disgusting. Have had to re-educate DH since he moved in with me!
As for hand towels, we have 2 between the 4 of us. They get used for drying my hair after a morning shower, kids hair after evening bath, and all our hands when we wash them through the day. They get washed once a week, or more often if someone in the house is ill (tend to make ill person use a separate one of their own then, usually.) 2 DS's share a flannel, and it gets changed every couple of days (DH and I just splash water on our faces to rinse soap off so no flannel needed for us usually).