Agree - couldn't live without muslins! We got a bumper pack of white ones from Mothercare. We were also given some Tesco ones, but I find that they really go out of shape (not that it matters too much, I suppose, considering what they're used for) and are thinner, so I prefer the Mothercare ones. A big pack of plain ones was also cheaper than ones with designs/embroidery.
The best thing about muslins are that they dry so quickly after being washed in the machine, so you don't need to worry about running out if you've just washed a load.
In the early days we used them for: lining the cot/moses basket to protect the mattress from possetting, covering up when latching on, makeshift bibs, mopping up spills, over the shoulder as a burp cloth, improvised sunshade, over the changing mat to make it less cold/protect from wee...
Now that DD is abotu 9 months we still use them as makeshift bibs, mopping up puke/wee/poo (especially as DD still likes to wee when I've just taken her nappy away!), general spills, over the knees in her highchair to protect her clothes...