I made a set of these for my mother-in-law a few years ago and hers are still going strong. I recently made another set, so I thought we'd do a simple how-to. It's not really a detailed tutorial, because I didn't take pictures all along the way, but you'll get the idea.
seven flour sack towels - got mine 4 for $4 at Target
at least 1/4 a yard of fabric for each towel - I used up some scrappy chunks
inkjet printable fabric sheets (source - Hobby Lobby)
matching thread for each fabric
WASH AND DRY TOWELS!!! This is very important because these things shrink, and you want them to shrink up BEFORE you sew them.
Cut your fabric (on the grain) into 2 inch strips and sew short ends together with a 1/4 inch seam. To calculate how long of a strip you'll need, measure and add all four sides of your towel and add 6 to 8 inches for good measure. Press all seams open.
Fold your long strip in half lengthwise and press.
Open the strip and fold both edges to meet together at the middle fold. Press.
Now you're ready to attach the binding. Starting in the middle of one edge of your towel, fold the binding around the edge of the towel and pin in place. Do this all the way to the corner. When you come to the corner, shape it into a mitered edge and pin in place, then continue attaching binding all the way around the towel.
When you come back to where you started, overlap your fabric about 1 1/2 inches. Cut the loose edge of the binding and fold under 1/4 inch. Fold the overlapped piece around your towel and pin in place.
Sew 1/8 inch away from the inside edge of your binding all the way around your towel, making sure to catch BOTH the front and back of the binding and backstitching at start and stop points. This is the cheater's way of attaching a stright grain binding.
Now it's time to make your labels. Using your word processor, choose the size, font, and color that you want your labels to be. Following the directions on the packaging, print the days of the week onto your inkjet fabric sheets. Follow the directions for colorfastness.
Cut your labels out and pin in place on your towels. Sew 1/8 inch from the edge of your label using thread that matches your binding fabric for the topstitching and white thread in the bobbin. I usually sew around it at least twice.
There - a kitchen towel for every day of the week.
Questions? Leave them in the comments, and I'll answer them there.