Substrate – For use as a substrate (ground material) you should choose whichever one is easiest for you to keep clean and dry. Many people successfully keep their reptiles on newspaper or paper bags. When soiled, the paper can be pulled right out and replaced. Another option is astroturf or some other kind of carpet. This is a little nicer to look at than paper, but is slightly more difficult to keep clean. If you have multiple pieces of carpet, you can simply replace the soiled carpet with the clean carpet. The soiled carpet can then be rinsed and cleaned with a bleach solution. (One part bleach to ten parts water will do.) You should always rinse items thoroughly that have been cleaned with bleach or any detergent.
I do not usually recommend using a partiuclate substrate. That is, sand, gravel, wood chips, or anything similar that your iguana can ingest. Sand, gravel, and wood used as substrate has led to impaction, and the dust from wood chips/mulch can lead to respiratory problems. The problem is that the iguana is enclosed in a very small space with this particulate matter, and due simply to cramped quarters or boredom, iguanas frequently end up eating quite a bit of their substrate (or inhaling it).
Exceptions to the particulate substrate rule:
I only recommend substrate such as cypress bark or mulch (never ever use cedar or pine chips) in very large enclosures. If the iguana spends 99% of its time basking on shelves or branches, and only retreats to the floor to poop, bark/mulch substrate can be satisfactory.
A popular particulate substrate for small cages is rabbit food (essentially alfalfa pellets). These pellets are not harmful to ingest (as long as they are clean!) and some people find them more aesthetically pleasing than carpet or paper. If you use this as substrate, you must be dedicated to scooping out soiled rabbit pellets immediately.
Above all, you must choose a substrate that you are willing and able to keep clean and that is not harmful to your iguana if ingested. Minor cuts or scrapes can become infected if your iguana is living in dirty conditions. Also, the cleaner you keep your iguana cage, the less chance that mites will decide to move in. (See External Parasites section.) If you find that you cannot keep a more exotic substrate such as wood chips clean, you must change your substrate to something easier like carpet or paper.