newspaper and paper towels do mold but anyone with half a brain will change them long before this happens. Some people however use newspaper and paper towels UNDER mulch substrates for some unknown reason and this is a huge problem and mold/mildew is automatic.
Many people use newspaper or paper towels. I do too for newborns or hatchlings or for snakes being treated for various ailments but I don't make a practice of using them because and only because I personally don't like the way it looks and I prefer my snakes have the ability to burrow. It's also easier for me to get my UTH temps stable with some depth of substrate. I don't like having to change it daily because of waterspills either. My current collection is about 70 some odd snakes. Too much daily paper changing for me to deal with. Many of my snakes require high humidity (brbs, emeralds, amazons, gtp etc) Cypress holds moisture well. I just pour in a gallon of warm water once a week or so over the UTH and the cage stays steamed up for days and doesn't grow mold...It did for awhile on the wooden perches but I replaced them all with PVC and now have no mold problems.
It all comes down to taste, common sense and what's best for your pets. Some like the sterile lab cage look. I prefer the as natural as a cage can look look.