A cat arranges her bed in a blanket for security.

One kind that cats love are Lance's Kitty Blankies, available at Lonewolf Designs:
Kneading on blankets and other surfaces is a normal, instinctive behavior for cats. Contrary to what some might believe, it is not a result of separating or weaning a kitten too early from her mother. The behavior is usually harmless, unless the kitty starts to suckle on the blanket fabric and ingest it while kneading.
Very soft security blanket meant for human babies, but cats and kittens will like it too!
You are the cat's pajamas! Show the purrfect one you think they're special with this blanket that displays a lovely complement of their character. Grreat Choice™ Micro Terry Blanket Cat Blanket available in Cranberry, Baby Pink and CreamThe Pee Proof! Dog or Cat Blanket is a CeCe's Wool exclusive. We make them ourselves.Prevent some cat hair from getting on blankets by brushing the cat.
Here are some very simple ideas for making blankets for cats in animal shelters. I’ve put together yarn suggestions and stitch pattern recommendations to match the weight of the yarn (either bulky or super bulky). The blankets are dense to offer the cats plenty of cushioning for warmth and softness against hard cage floors.It is not only for comfort reasons that cats love to lie on a cat-sized fabric item on top an already comfy piece of furniture. It seems that small cat-sized blankets or mats are a special defined territory which makes cats feel more secure, especially in a multi-cat home. Cats who won't both nap on the bed or the couch at the same time sometimes will if there are separate little mats or blankets, apparently feeling that as long as the other stays on his or her own mat, the area is divided satisfactorially.While cats do like to sleep on human furniture such as beds, sofas and stuffed chairs, they like it better when a cat-sized mat, blanket or even an item of your clothing is on those furniture items. Cat beds, mats and blankets add extra comfort, and warmth, depending upon what material the mat or blanket is made from, and how warm or cold it is in the house.Also, when something brand new is brought into home, it smells "alien" to the cats. They usually take a few days to start sleeping on a new cat bed. It is good to wash a new cat bed, mat or blanket, so it smells like the usual "clean laundry" smell the cats are used to from the clothing you wear, not to mention simply getting it fresh and clean after who knows where it had been previously and what got on it.Cats usually prefer to sleep up off the floor, so place mats and pet beds up on something, perhaps on a table, the foot of your bed or the end of the couch (unless you bought an elevated pet bed.) Placement matters a lot to cats, and a particular cat will have his own ideas of where the right place is. So if a cat won't use a pet bed or blanket, try it in different areas. Or wait until the seasons change to see if it is used more when it is cold.A low cost or free alternative is to use a low sided, cat sized cardboard box, filled with a small soft cushion. Then roll towels or a small blanket you already have into a "tube" to make cushioned sides for the cat to lean on. It won't be beautiful, but it will be comfy for the cat.