I apologize if this has already been brought up here, I hadn't seen it mentioned before. And since so many here (like me) are switching to progressive companies, I wanted to plug this one.
Here's a link:
http://www.americanapparel.net/They are a garment company located in downtown Los Angeles. Everything is done in-house (no sweatshops!). They use certified organic cotton for most of their products, and they recycle their own scraps. They have a strong focus on both human rights and environmental responsibility. Plus, they make a great T-shirt! You can order directly from them or google their name to find retailers.
Also, a lot of bands are using American Apparel for their merchandise (Sleater-Kinney, Wilco, The Shins, etc.) so you might want to try and contact your favorite bands and urge them to do the same.