Martin was given a hooded towel at his baby shower. We use it for both boys because they are small and one towel can dry them off fine. But we thought as they got older they would appreciate their own towel. I had to return a few duplicate things after baby three's shower and I used the money to buy them both their own towels and washcloths. I spent about 30 minutes hemming and sewing the washcloth to the towel and had custom made hooded towels!
We really don't like baby towels around here. They are made of some thin material that doesn't dry. Real towels are the way to go! :) Plus, they can use them for longer.