This is one of the few "feminine domestic" things I can claim I do regularly. We do not use paper napkins. I am a fairly recent (few years ago) convert. My previous reasoning had been: we have X children at the table and children stain napkins. Well, shoot, adults stain napkins too! So how do you do it?
Use colors and patterns!
I have seven different sets of napkins, enough for every day of the week (this was not by design, just chance). None of them are white or have white in the pattern.* And I didn't pay full price for any of them.
Turn them into quick mini-tablecloths or placemats for children.
Use them as bibs.
Use a plain lightweight one as an emergency scarf for a little girl.
Use a group of multicolored ones in a basket as a table centerpiece.
Keep the baby happy while you fold the rest of the laundry
(he can throw them in and out of the clothes basket).
Substitute for a doily on an end table.
Use as a sheet for a doll bed.
Line a basket for rolls or muffins.
The uses are endless!
What are your cloth napkin secrets?
*Disclaimer: I do have one nice set of 10 white cloth napkins. However, I do not pull them out when I'm serving spaghetti to pre-schoolers.