I have used the ones from Walmart. I hear others have purchased from Dollar stores and all have worked out great. Good luck
Yes, a location would be good -none on your profile, either. Or do you fancy a trip to Croydon, Victoria, Australia to shop for teatowels? :) It'd be nice to be able to do a shopping tour just for our favourite sewing supplies, wouldn't it? I've found in the past it is cheaper to buy tea towels than the fabric to make them, though.
In the US I get them at the dollar stores. Here we have Deals and also Dollar Tree. I buy all my dishtowels there and have embroidered a ton since last Christmas! Can't beat a dollar towel!