i love my dish towels! I have a nice set of “plain” plaid ones for all seasons, plus a variety of holiday/seasonal ones that we rotate through during the year. These kitchen towels are not decorative; they are my workhorses. I don’t know how long ago, perhaps 4 or 5 years now, I banned paper towels from my kitchen. 
Since then there have been very few moments when I wished I had a roll. (In fact, I may have a roll hidden away in the laundry room, but I’m not really sure.)
I just don’t buy paper towels. For some dumb prideful reason, I was pretty upset when I bought some this summer in France thinking that it was toilet paper. Oops. Instead, I used dish towels. I even brought them to France this summer and camping last week. I have a drawer full of nice dish towels. I use two or three a day in the kitchen, then throw them in the laundry. For other cleaning duties, I use the kitchen towels that have degraded down to rag status.
Granted, I did not research the origins of these towels, bought mostly at Cost Plus World Market, but I know that no matter where they came from, my purchase and washing of the towels is not putting nearly the dent in the environment as paper towels would.
As with using canvas bags instead of plastic bags, the move away from disposable to reusable was not difficult, just took some changing of habits.
Our family does use cloth rags most of the time. DH really can not tell the difference between a good towel and a rag-towel. oh well, we have no good towels. My mom (as her parents before her) use flour-sack towels for dishes. It can be hard to find just the right weight, you know? but i do like them. — yours too!