Today I came across a collection of very charming satin challah covers you can see next time you're at the Mamilla Shopping Mall (a hop-skip-and-jump from the Old City of Jerusalem). Nice fabric and fabulous design work. I liked the way the designer, Avi Luvaton, manages to create a very attractive challah cover using just one or two colors. Very elegant, without being at all brash. But be warned: each one will set you back $504. Not cheap!
Also, they seem to be a bit on the small side. My mother used to have a sort of doily cloth she used to cover the challah, which I was never so fond of. Part of the problem is that the challah covers here are round, whereas most challahs are elongated. So your "cover" doesn't quite keep the challah covered!
If you like round challahs, this might actually work well.
Also, it could work well as a wedding gift. Newlyweds often have very small challahs. And by the time the have enough kids to move up to regular size challahs, they won't want to have these pristine pieces out on the table for their toddlers to trash up.