For what they are worth, I'll offer some thoughts.
Nylon's in general nicer because it isn't as prone to wanting to stay crinkled up. Good parachutes are really worth the money, IMHO.
One test for fuselage packing once you come up with folding method is the Puff Test. With no motor in the rocket, blow into the motor mount with a quick "cough" type of of exhalation and see how easily it ejects. It's surprising how little it takes, and you'll learn that the nosecone inertia and attachment near it can be really helpful in "pulling" the bundle out when there's lots of space in the fuselage and the puff just goes mostly around the chute bundle.
As for folding, here's an idea: for rockets approaching 38mm in diameter consider laying the chute out on a table longwise, folding it so that it is very long and thin, put a small cylindrical roll of paper towel or tissue inside the base of the shroud, then band around just the base of the chute. The pad makes sure you have a large enough diameter to grip and alleviates some of the chute crinkling, while staying less than your fuselage diameter. Upon ejection you'll have a long fluttering chute held closed at the base, and it will act somewhat like a drogue. Be sure to use a swivel so that your lines will stay reasonably untwisted, and carefully make sure you tether it in such a way that Chute Release is never yanked by the tether, but yet is also securely tethered. On a high quality sewn chute that can be a shroud line, but on a simple plastic chute that would be a really bad idea as the shrouds are quite delicate. Feel free to make a long tether if it is needed to prevent yanking.
(Tether yanking is a common failure mode. It can even pull Chute Release apart in violent ejections of larger rockets.)
People have also found that fabric bands have less friction against the fuselage than rubber bands. Fabric stores sell them, as does Amazon. And they are used by some small rockets as shock cords.
As always, ground test your bundles. (And then puff test your loading.)