I used a thick rib knit, which ended up being very stretchy and, well, gigantic in the neck. I've since learned that you need to make the neck binding a bit smaller than the neck opening. Plus, it all depends on the stretchiness of the fabric.
When all is said and done, you just have to practice and not be bothered by a few duds. My boys haven't worn these much, especially after they've been through the wash and look even more baggy. However, they were so thrilled I made shirts for them, that more than made up for my disappointment in the shirts themselves.