We live in a hard water area too. And we don't have a water softener. I don't use any kind of fabric softener in my washer ever. And I don't use dryer sheets when I do a load of towels.

In my understanding - learned back in college in my textile chemistry class at the University of Wisconsin-Madison -- the softener coats the fibers of the towels, making them less absorbent. Want who wants towels that don't dry?

IMHO, the best thing is to be sure you are successfully rinsing all of the soap (washing machine detergent as sell as soap and cleansers used on washcloths)out of the towels.

To do this, start by running towel loads alone -- and then run them through an extra cycle with no soap. (You may have to do this a few times until the water shows no signs of soap during the agitation cycle.)

You'll be amazed at how much soap shows up in the water during the soap-free washings!