The sponge itself is pretty thin, about the weight of a thick card stock, very easy to cut with regular scissors. I believe I bought a package of these sponges at Trader Joe's, but Dharma Trading also carries them.
Here's my painting set-up of an ironed piece of white broadcloth, several pieces of paper sandwich wrap (like delis use), with a piece of freezer paper underneath to keep my table top dry and paint-free. I re-use the freezer paper over and over again until it gets too much paint on it. The deli paper absorbs excess paint and moisture and ends up being pretty usable itself for collage and other uses.
Here is the shape I cut out of the compressed sponge. surprise surprise a spiral. Keep it a simple shape, you're not going to get a huge amount of detail with this method.
"Just add water" and pow, look how big it is all of a sudden. Make sure to squeeze out the excess water before you continue with the paint, otherwise you'll just get a lot of smeary mess without the texture of the sponge.
To apply paint I made a small unmixed puddle of the colors I wanted to use (just plain old craft acrylics, nothing fancy or specific textile paints) on a Styrofoam tray (cheap and easy palette!) and dipped the sponge spiral into it, checking to make sure that there was paint all over the shape before stamping.
The upper left is the first stamping, you can see how the extra water bleeds out into the fabric which gives it a watercolor type of look.
In the upper right I pulled the spiral apart a bit as I set it down on the fabric to give a slightly different shape.
The lower right is just the sponge plopped down tightly curled up. A lot of easy variation between stampings.
More and more layerings of the image being built up, with mostly gold/yellow paint on top of the gold/green mixture I started with. Since you're stamping with very little paint the fabric won't get too terribly stiff, it will still be easily sewable.