The best items for creating a memory quilt are woven cottons and cotton blends. Examples of these clothing items are button down or oxford style shirts, flannel receiving blankets or pajamas, cotton swaddling blankets, and pants made out of twill, khaki, or jeans. Generally, anything that is not stretchy works best.
Knit fabrics can also be incorporated into a memory quilt. Examples of knits are onesies, t-shirts, sweatshirts, sweaters, and golf shirts. However, they require a stabilizer to be added to avoid stretching or distortion. This changes the options for quilting patterns and adds to the time and expense of making a quilt.
Even satins, silks, rayons, and other dressy fabrics can used in a memory quilt. Just like with knit fabrics they need to be stabilized by using an interfacing. Avoid any item that is translucent, since it will show the interfacing and potentially the batting, in the middle of the quilt. Keep in mind that anything delicate that requires dry cleaning will require that the finished quilt be dry cleaned as well.