I used carpet at first, but had problems with it. Then switched to shredded newspaper, then newspaper bedding and finally landing with cypress. I like cypress because it holds humidity very well.
I bought cypress mulch from HOME DEPOT. Make sure to check the bag for pesticides, vermiculite, etc... that stuff is a No No. Also don't buy the died mulch. I would suggest baking the mulch, 200-250 F for 2-3 hrs.