Cadbury and I seem to have the same thing that we try and fix every time... we always have a mat for Cadbury in the lounge room for her to sit on (originally is was a bed or basket but she eats them so now its only blankets :P) and I always have it out straight and flat
then she comes along and does this:
and will either lie not on the blanket or continue her nest making
the blanket always ends up in a screwed up ball and she will sit on it for about 10 minutes before she decides that its more comfortable to sleep on the carpet..
it then starts again and I straighten it out and she makes a nest