I have newspaper, straw and shredded paper with a hay rack upstairs, then just newspaper and their litter tray downstairs, with another hayrack.
I find this works well as mine is a hutch/run combo, and when I had straw downstairs I used to find most of it ended up in the run :roll:
Although I still get a bit of straw falling down the ladder now, it's definitely a lot better than what it was!
Also, I think the top is a bit less draughty on colder nights when their ladder to the run is open.