I use these microfiber towels.
This is a discussion on Owners...what are you using to clean the smears? within the iPad General Discussions forums, part of the Apple iPad Discussions category; I use these microfiber towels....
Do a Wikipedia search for micro fiber and read the article. Look for the diagram of cotton vs micro fiber on the right hand side.
They are two completely different animals with micro fiber being light years better for cleaning an iPad.