I'm with Aunt Annie...tear away on the bottom and Solvy WSS on the top...and I don't always hoop the towel...depends upon how thick it is...if I don't hoop, I use 505 spray adhesive and then pin the towel to the hooped stabilizer...
I prefer to use a tear-away on the back and Solvy wss for the topping. The topping prevents the stitches from getting lost in the nap. Embroider Library has a very good tutorial on embroidering on towels.