Another question you might ask yourself: Is it really necessary to use cloth napkins verse paper? Well a formal place setting really should use cloth instead of paper. It is after all, proper etiquette. However, we see more and more paper being used at dinners, especially weddings. Paper just doesn't give the feel of formal or fancy. Paper can be acceptable for finger foods and cake, but not a formal dinner. Perhaps for large parties, consider renting napkins from a company. Yes, you really can rent cloth napkins, as well as tablecloths, chair covers and other things. Check around with wedding decorators or party suppliers. The best part of renting these items 1) you do not have to buy massive amounts of items you'll never use again 2) you can return them dirty. Yes, that is return them dirty, you don't have to wash them!
Place the napkin to the left of the place setting. This method is one that many are familiar with. A fold, such as a basic silverware pouch is a good choice with this placement. These method works well for settings that have a soup bowl resting in the middle. If the silverware is not inside the napkin, place it to the left of the silverware. There should be nothing sitting left of the napkin. There should be equal distance between all items on the place setting, including the spacing of the napkin.
Place the napkin in the center of the place setting. For example, a fan folded napkin setting in the middle of plate. Other folding techniques are acceptable for this napkin location.
For something more unusual. Fold a napkin into a shape, such as the Fleur de Lys Goblet Fold. Then place it into an empty water goblet. Looks very fancy and formal. This is sure to impress any dinner guest. There are other folds that will work in a goblet as well. If the goblet technique, be sure to use the water goblet, not the wine.