So this afternoon I've been mucking about with the cloth modifier in max to get some good high poly versions of my banners. I've got some pretty cool (but time consuming) results out of it.
My first one on the right shows my first attempt, but after tweaking the settings and 10 or so attempts later I've got the sort of thing I want. Not too stretchy but clearly a flexable material that I want my banner to be made out of.
Next I've just got to map some designs onto it and bake down the normals to a lower poly version.