I simply folded the towel around the pillow, and had the nice end out. That left me a bit over one inch on each side, and I decided to just sew straight down each side.
Here it is, pinned up:
ROFL! Did I just mention that I am having trouble downloading pictures?!?!?! How this pic got on here, I do not know. Looks like some early garden bounty...
Back to the pillow:
This is the aforementioned quarter inch I was going to sew:
Hard to explain, but very easy. Voila:
Here's the envelope back:
I looked up several ideas from my pinterest boards, and got some inspiration, but couldn't find exactly what I wanted. So I tied it in a knot (I know, brilliant, out-of-the-box thinking!!), stuck it in there, and sewed it up, then turned it right-side out.