I looked around and found this sensible solution: http://www.deliacreates.com/blue-hooded-towel-poncho/
It's not that much sewing , it uses bath towels which are thicker and cheaper (so sad I couldn't go to Costco to get even cheaper), and looks like they won't grow out of it as fast as something more fitted.
Changes: snaps on the sides, a kangaroo pocket, and a single layer hood.
I traced a hoodie and added some depth to the hood. I just doubled the pocket.
Ms 3 likes hers ok. We'll see about Mr3. He's into me making him into a burrito so tightly wrapped that he can't move his arms.
The kids picked out the colors. These are from target - 3 total of their mid line and there's almost half a towel left over.