I use finely shredded cypress mulch mixed with moist bed-a-beast, shredded sphagnum peat moss or even the whole long-fibered sphagnum moss. Works very well, no one has had a bad shed and no one eats the stuff. One of my male cresteds loves to bury himself in it up to his head, and it gives the girls something to dig in. You can get big bags of the cypress, bake it in the oven to dry it a bit and get rid of any buggies, and then put it in a rubbermaid for mixing. You can also get big bags of the shredded peat moss without additives and Lowe's sells the bags of long-fibered sphagnum moss by Mosser Lee.

I've used paper towels too, but they don't seem to like it. I do use it for babies though, as it is necessary.