Thanks to Stephanie for this Frugal Baby Tip!
I did get the diaper flannel at Wal-Mart and made lots of diapers with it. It is very absorbent. When I was pregnant, I made 2 dozen prefold for my newborn.
Now that she has outgrown them I use them as doublers for nighttime use. They are wonderful. I have also made some fitted diapers out of it, but I should have made it with a detatchable pad, because all those layers of flannel do take forever to dry.