Our congregation is hosting a Ladies Retreat this weekend and I was asked to donate a door prize. The theme is Keeping it Simple and Sweet, they are decorating with cupcakes... so I immediately thought of this design and decided to make a Stay-Put towel!
The Cupcake Psalm design is from the Itch 2 Stitch.
Topsy Towel tutorial posted on Embroidery Library. In this case I did not applique a square of fabric, nor did I square up the towel. There is a free V-shaped buttonhole design posted on Sew Forum that goes with this tutorial. If you are not a member of SF, it is free to join.
Edited to add:
Kimberly asked to see this in the hoop. Obviously it's too late to take that picture :) I'll do that on the next towel. But here's a screen shot of my embroidery design file. I hoop sticky stabilizer, run a placement stitch line at the bottom, place my towel on the hoop using the line as my guide, float a piece of tearaway on the bottom, return to machine to stitch the V-shaped hole and design! My secret for perfect design placement :)