Mark,
I've used 1/4" nylon cord from my local army/navy store successfully for 2.56" and 3.0" diameter rockets. Just like with the larger rockets you have to use 20' or so in order to let the parts of the airframe joined by the shock cord slow down from air friction. If I don't have enough room to pack 20' of braided nylon cord I use 6' to 12' of 1/4" or 3/8" cotton covered elastic.
When using either elastic or nylon shock cord you have to look out for a couple of things. First any shock cord will degrade with repeated exposure to hot ejection gasses. Shock cords should be checked before every flight to verify that they are still AOK. I use either eyebolts and quick links or kevlar cord wrapped around the motor mount tube and epoxied for my shock cord mounts and I change my shock cords or elastic frequently.
Secondly when using elastic ask for the cotton covered type and when using 1/4" braided nylon get the fine braided type. When I say fine braided I'm thinking of the type that looks like heavy duty boot laces. Don't use either the three strand braid or the coarse braided type as they degrade much faster.
Ken Holloway, NAR #78336, L-1