You can buy fabric anywhere.  I like good quality baby flannel, but that's up to you.

I personally buy our fabric wholesale from Richlin Fabrics.  I get the fabric in about two days.  In order to buy wholeasale, you must set up an account using a tax ID number which is not a big deal to get.  Let me know if you need help with that.  For more information on their fabric, see www.richlinfabrics.com .  Please use an "s" on the end of fabric or you will get the wrong website.  I pay $1.25 per yard if it is on sale.  Usually it is $1.45 if you buy a 50 yard bundle, but specify you need baby flannel.  If you buy it by the bolt, it is $1.75 per yard.