Drum Muffling is not an easy issue. Experimenting is the key to figuring out a the best sound for your drums. Different drums are going to sound better at different tunings, and your drums will sound different in different rooms. Most important, what sounds good to me may not sound good to you, it's all about finding the sound that you love!

Trying a bunch of different things will give you a small arsenal of ways to get a good sound out of your kit in any situation.

I will elaborate on my basic set-up to give you a starting place for your own experimentations.

The bass drums on both my jazz & rock kits are tuned pretty loosely. This means high enough that there is some tone and not just the flappy sound of loose drum head, but tuned down near the lowest tone that I could get out of the drum before it starts sounding like just a piece of paper, or broken mylar, instead of a drum.

I have a 4-5 inch hole in the front head (off-center) and an old feather-pillow inside.

With this set up I really like the tone of the kick drum, but the volume is not very loud. It's good for a quieter types of music or if you have a good PA system to mic the kick drum.

Generally, you can get a louder sound from a tighter bass drum head, but the pitch goes up and you don't get as nice a "thump"

Then for variations I carry a nice thick bath towel and a soft piece of felt fabric about five foot square. Generally, the pillow by itself sounds great, sometime I use the pillow with either the towel or the blanket added, sometimes just the blanket, or sometimes just the pillow. It really does depend on the sound of the room, sometimes one thing or another just sounds much better.
In a "live" room with lots of reverb I think the kick sounds better pretty dead. But in a very "dead" room with LOTS of heavy drapes and fabric where the sound just gets sucked up as fast as you produce it, I think a more open sound in the kick drum is better.

As for the toms - I use a small bit of gaffers tape 2 inch wide tape around 3-4 inches long placed on the batter head near the upper edge of the drum.

Gaffer's Tape is like duct tape but not glossy, thicker, more cloth in it and it absorbs the highs better than duct tape. Unfortunately it is also more expensive than duct tape and can be harder to find.

If tape alone is not damping enough I use a small bit of tissue (maybe a 1/2 inch by 3-4 inch piece of tissue about 2 or 3 layers thick) under the gaffers tape

There is an old Simon Phillips video that has just come out on DVD:
http://www.amazon.com/Simon-Phillips-Complete/dp/0739040251
it has a really great segment on tuning & muffling the snare and kick drum.