I duplicated this in my own powder room after visiting the lobby restroom at the Beverly Wilshire Hotel in Beverly Hills.  It has been quite a "hit" with guests.  Take a white wash cloth and fold two opposite points to the middle.  Then roll from one of the other unfolded points all the way until the washcloth is in a log shape.  Stack about 18 - 24 of these in an attractive basket on the sink. All guests will have separate "towels" with which to dry their hands.  When finished, they can just drop the cloth into another basket that is placed on the floor.

Thanks for the tip Linda!