"They also wanted us to sleep on our sheets from the night before and for us to reuse our towels"

This has actaully become pretty common, even in more expensive hotels. They talk about it helping the environment, and of course it saves the property money as well.

It doesn't bother me, I don't have clean sheets every day at home, nor clean towels. And the ones I have seen do give you the option of having fresh stuff.