By this far, I've been using a 70's terrycloth linen towel, as it's quite small, light and dries quickly compared to terrycloth cotton. This 'old school' towel has worked just fine, and it's actually lot better than the ones usually sold in outdoor stores. I've heard quite a few reviews about these modern microfiber towels, which are light and dry quickly, but in real life microfiber won't absorb water that well, so it doesn't really perform that well for a towel.
Although my old towel works just fine, I decided to give a go for another type of linen fabric. Linen, that I'll use for the new towels, has a square waffle kind of texture, so it's sort of a compromise between normal and terrycloth linen. It's relatively light, but it should still absorb water quite well. And as my cousin has pointed out on an interrail trip, waffle linen also dries pretty quickly on the road.
At the moment, I've got one new waffle linen towel, which was completed today. The towel is approx. 120x50cm and weighs ca. 200 g.