Caddy, as in you can lift out all the flatware at once? If so, I'd love to see a picture. That sounds like a handy thing to have :)

But yes, clear contact paper, or any type of shelf liner would work. If your flatware stands on end, though, I would want something with some cushion to it.

Unnecessary. Unless you drop your knives in point first.

Line with felt.

I wouldn't use felt because you can't sponge it down. I'd probably stick with the clear Contac paper, or maybe some sort of plastic drawer liner material.

they have thin cork lining on a roll......not the cheapest but very nice.

I agree with Sophie that unless you drop something point down, it's not going to scratch the wood silverware compartment. If it does, a little sandpaper can sand out a scratch.