We just bought one for DS17 for Christmas!
We washed everything before sending. It didn't seem like they re-washed it there, although I would think that if it was really wrinkled, they might steam it or something so it's easier to work with.
You have to cut the tshirt kind of in a "bisect" way (basically follow the seams) so they have a front and a back, if you are using both sides. You still have to cut it the same way, but just send the side you want, if you are only using one side. We needed to find 30 tshirts (or whatever added up to 30 fronts and backs) for the 5'x6' blanket.
DS's turned out beautifully, although they did send us a bill for $20 extra for having to "reposition" some of his jersey's to fit into the square. And cutting out 30 tshirts was a LOT of work! You can also take a color picture of the way you want the shirts positioned. After you buy, they send you an email with all of the instructions and a packing slip for the box. We mailed the shirts out around Dec. 10th and paid for Christmas shipping, and received the finished blanket back about a week before Christmas. I cannot express the emotions I felt seeing the finished product - 17 years of memories at once.
When DS17 opened it on Christmas morning, he was speechless. You could see his facial expressions as he silently touched a square and re-lived each memory from each shirt/jersey. He told us it was the best, most thoughtful gift we have ever given him, and he has used it multiple times in the past few weeks.