Whenever possible, always use bleach when washing towels. If this is not possible (for colored towels), pour a cup of white vinegar or 1/4 cup Febreeze? into the washer with the towels and detergent. Never overload the washer with too many towels (or clothes, for that matter), as they will not have room to agitate and clean thoroughly.
Never let a washed, wet load of laundry of any kind sit in the washer for long; dry as soon as possible. For a towel you are currently using, hang it in a fashion that will allow it to dry completely between uses; if thrown on the floor in a ball or folded over a towel bar, it can quickly mildew and the smell is hard to get rid of.