We use straw but the people I work/handled for use cedar bedding. I don't like the cedar bedding because I have a few dogs who like to hoard biscuits in their houses and then when they eat the treats the cedar sticks to them and it makes them really sick. I mean like throwing up and the works. Hay usually isn't as good an insulator as straw and a lot of dogs DO like to eat it so you may be better off using straw as long as you don't live in an area with those horn flies like Cliff said. But try different things and see what your dogs take to the best.
Thought about Heat pad, straw,cedar chips
I have always just used wheat straw. The last time this subject came up someone posted that wood shavings were better than straw. He said that you could put your hands on the wood and it will feel warm, but straw does not??? I always thought straw was a better insulator because it was like hollow tubes...the air inside got warm and it would stay a while.
Carpet or rugs as a first layer on the floor seems like a good idea to me, but every time I try it the dogs just pull out the carpet and leave it in the kennel. I have never been able to figure out why. I thought maybe it makes them too hot??? They do the same thing with carpet split and nailed over the door. Rip it right down before I get in the house. I once used a board and screws to hold it up so the dog couldn't just tear it off...I found him sleeping on the cold hard concrete the next morning. I thought he was dead but he got up wagging his tail.
I don't get it with the whole dog bedding thing. They like the straw though, I put in fresh straw and they spin around and squeal in the dog house until it is just right.
alternatives to straw for warmth
Yes, straw breaks down waaaay faster than anything else, and it therefore is alot more work....but I believe the question was "What is the best bedding for outside dogs?". Straw provides more insulation from the cold, and is softer to lie on.
This all started after putting straw back in the dog house