While you may be tempted to throw a couple of extra towels in the load, don't do it. The towels need room to move around in the washing machine to remove dirt from their fibers. More importantly, a small load size allows more thorough rinsing, eliminating the soap residue that makes towels stiff.
Most people use too much detergent when washing towels, making it difficult for the washing machine to rinse it all away. Always measure the detergent before adding to the machine. Use the smallest recommended amount, even if you have hard water. If you use a water softener, reduce the detergent even more.
Add 1/2 cup of baking soda with the detergent. The baking soda helps to wash away fabric softener residue and body oils that make fibers stiff. An added benefit is that baking soda helps reduce odors.
According to Overstock.com, fabric softener is often the reason towels feel stiff. The more times you wash your towels without it, the softer they become. Try substituting 1/2 cup of vinegar in the rinse cycle. It softens towels by counteracting the detergent residue.