The cloth itself has no special power. It is just a tangible reminder to the person that someone has prayed for them and by extension that God is looking over them daily. I emphasize. The CLOTH HAS NO MAGICAL POWERS. The Bible verse Acts 19:12 is often quoted and I believe the verse to be true. The previous verse gives the actual meaning.
Acts 19:11 God did extraordinary miracles through Paul, 12 so that even handkerchiefs and aprons that had touched him were taken to the sick, and their illnesses were cured and the evil spirits left them.GOD did the miracles. Paul was the conduit through which God performed them.
If you are making cloths for soldiers in combat wool is suggested because of flammability issues. Otherwise, you can use anything you like. Since I crochet, I looked up crocheted cloths and there is such a variety of designs.
I have two patterns on my own site (currently last pattern on the page) but really they are simply crosses and anyone can come up with a similar design. A cross is a cross. It might be taller or fatter or use different stitches. I've also seen cloths with hearts and some which are plain with no design.
I might also mention that I am sharing the links to the patterns. I make no claims regarding any extraneous info found on the sites as to how these folks use their cloths or anything else. The finished products look nice and it is generous that they have shared these patterns with others.
As I work the patterns, I may add notes.
http://simplyjeanarie.blogspot.com/2010/08/cross-prayer-cloth-crochet.html This one uses a cross-stitch and is very pretty.
[Edit note]: You need 28 total stitches to work the pattern as is, so the beginning chain should be 29 if you're working regular chains and 28 if you're working foundation sc.
Also, row 13 was confusing to me, so I rewrote it for myself as follows:
Row 13: dc in next 6 sts, * ch 1, skip 2 sts, 1 dc in next, then work 1 dc "BEHIND" dc you just worked, rep from * 4 times, ch 1, sk 1, dc in next 6 sts (5 cross-stitches, 6 "holes")
On the same site is a plain cloth pattern.
This one uses popcorn stitch. http://hendersonmemories.blogspot.com/2013/10/prayer-shawl-ministry-pocket-prayer.html .
On that same site is a heart shape design. http://hendersonmemories.blogspot.com/2014/01/pocket-prayer-cloth-heart-prayer-shawl.html
Here is a pretty filet cloth worked in thread.
There are also many other sites with knitted, sewn and other types of cloths and patterns. I personally like the idea of handmade as opposed to just cutting a piece of material and saying here is a prayer cloth.
Some folks add tags to their work that say "made with love by..." Every time you use that item, you think of that person, right? So if you have a prayer cloth with a cross or heart on it you might think of the person who gave it to you. You might also remember that God loves you and perhaps even be encouraged to pray - for yourself, for that person and for others you care about.
Some sites also say you should not sell prayer cloths. I did find several sites selling prayer cloths and they were very pretty cloths, some with verses on them. I really don't have a problem with that though I don't personally sell any. Not everyone can sew or quilt or crochet or knit. But everyone can pray. As I said before, God knows the heart. Happy crocheting!