The towel is fully articulated and animating based on the movement of the player.
I agree the ball is still slightly big but we actually even reduced it in size almost 10% this year. Here it is in Madden NFL 09:
(sorry, couldn't find a pro comparison image)
If we make it too much smaller it means we'll have to re-do nearly all of our ball-carrying animations (catches, run cycles, etc) because the ball will no longer be placed correctly. That is obviously a tough sell - to spend hundreds of hours tweaking animation data just to decrease the ball size by 3%. I just wish it had been right in the first place! Argh! Look at the size of it in Madden 06!
I'll see what we can do to shrink it just a tad bit more though.