aluminum foil is going to be the worst insulater, paper is a good insulater but not the best, so the best is cotton.
generally colored
Paper(s) made from recycled fibers are as good as paper made from virgin (non-recycled or secondary) fiber. One is not better than the other.
I would recommend any except thin paper it makes the plane wobble and it won't fly straight and crash onto the ground.
Shredded paper is/can be recycled to make paper. Most of the shredded paper is baled and shipped to paper recycling plant.