It's personal choice really.
Towels, make sure they are very fine thread so the claws don't get caught in it. Fleece as such is better because there isn't any thread.
You need to clean the hutch every day to get rid of the poo's, so piggy doesn't trample through them all day long.
In my indoor C & C I use a layer of newspaper (for absorbing the wee's) then a fleece piece cut to size for the cage. I change the fleece every two days and chuck it in the washing machine after shaking the hay off. So I have several pieces of fleece on the go at the same time.
If you already got fleece laying around at home just give it a go and see if that version is for you!