I like to soak darker fabrics in a bowl of 1:1 water and vinegar over night, not just an hour. Then rinse it out until it doesn't smell of vinegar, anymore, and air dry it. I sew clothing for dolls, and the fabric has to be set before it's used, because the dolls I sew for are expensive.
I get bird's nests sometimes, too, no matter which stitch I'm using. Usually all I have to do is take out the bobbin and just rethread everything. I also clean out the bobbin cradle and make sure there's no extra thread clogging up the hole where the needle goes down into the cradle. Keeping that bobbin cradle clear works wonders for me and my cheap-o machine.
You could also find a way to make your own iron on transfers out of photos. I know it can be done, but I haven't done it myself. My friend is using that method to make her own quilt, too, but I haven't seen it in person.
I get fabric from Goodwill, as well, buying the largest pieces I can find, and even valances and bedsheets. Of course, I wash everything before I use it, too. I guess it depends on what you're making and whether you are making it for yourself, or if you are selling your products.