I've used both toilet paper and baby powder. The baby powder can get a bit messy. But if you do use toilet paper, make sure it's a supersoft version, 2-ply. The wife picked up some real crap stuff. That killed me for a few weeks. Was getting really sore skin by the end of my stretches.
Also, with the baby powder, I remember DLD mentioned a while back, to use a little bit of water with it. The water really improves the grip with baby powder. Not too much though. I used to just wet my hands, shake off the excess.