Plastic or Fabric?
Advice/opinions needed.

Central Minnesota in an area with known with damp/wet
basement problems (4 foot deep split level)

The stone landscaping and plastic has been removed, low
spots filled (not tamped) in with dirt and graded away from
the house with the intent to put the stone back around the
foundation. (about 4ft border)

Neighbor wants to use fabric instead of plastic because he
has "water bugs" and was told this was because the plastic
doesn't let the ground dry out, giving the bugs a place to live.

Will the use of fabric relieve the bug problem?
Will the use of fabric (when graded away from the house) be the
same/more/less effective at reducing the dampness than what could
be expected using plastic?

Thank you.