LH,
I have a book on things that vinegar will do and it says that it will whiten socks, I dont know why it wouldn't whiten towels as well.
The method is to add 1 cup vinegar to 1 1/2 quarts tap water in a large pot. Bring the solution to a boil then pour it into a bucket and drop in dingy socks (or dingy towels?) Let them soak overnight. The next day, wash them as you normally would.
I don't know if it works or not, I just got this book recently and just read this hint this morning! If you decide to try it let me know if it works! Good luck.