Fleece would be the easiest because you won't need to finish the edges, as they won't fray.
You can do the tie blanket with 2 pieces of fleece. You can do a yard and a half, that's pretty good as far as size for a young child. For a older child you can do 2 yards. JoAnn has ready-made kits that already have the fleece pieces cut. However, it costs about the same if you choose the colors and patterns yourself.
I think it would take quite a long time to cut out all those letters, and it would be pretty busy-looking with all that on there.
If I were you, I'd opt for doing a 2 fabric blanket. I would choose a print and a solid. On the solid side I would put his name with the same fabric as the printed side and leave it at that. You could machine sew the letters or hand-sew them. (I often hand sew because I find it relaxing).
Good luck!