A few years ago I received a hooded towel as a gift for my son "Pear". It was one of the best gifts. Sense then I have made several form my kids and as gifts for friends and family. My kids still use theirs today! These are very simple to make, even if you don't know how to sew you can do this. First you will need two washcloth's and one bath towel. Place the two washcloth's right side together and pin along two edges to form an "L" shape, then sew those to edges, turn it right side out so the seems are on the inside and you will have a little hood! Next fold the bath towel in half and find the center and place a pin there to mark it. Now you are going to pin the little hood and the towel together, open up the towel and lay it out. Place the seem of the hood in the center of the bath towel were the pin is, you will want them to over lap about an 1 to 1 1/2 inches. Pin them together and sew. For a little more decoration you can find matching ribbon to sew along the edge or were ever you want! Hope your kids enjoy this towel as much as mine have!
Update: I noticed on one of the sites I like to go to she had just posted hooded towels too. She makes hers a little different. You can go here to check her's out!