I've been using fabric for years. It doesn't seem to fade like paper does, and it's really easy to put up. I use staples (my bulletin board is cork). It will look good until you get tired of it.
I get cotton material from Wal-mart. It comes in all kinds of colors and patterns. My science board has fabric with bugs printed all over it! I've never had a problem with holes showing. I usually put a border around the edges of the board after the fabric goes on (just as I would if I were using paper). My board is actually VERY long, so I get two or three different fabrics in coordinating colors and make several boards out of the one long one (with border dividing them). I've used fabric to cover my classroom door in the past (I put it on with heavy-duty tape) but I'm in a room now where the door has this ugly metal hinge thing sticking out of it and it's too much trouble to make any kind of covering fit around it.