I think every patch material out there can theoretically look good on a letterman jacket. It all comes down to the colors of the jacket, its style, and what it is supposed to represent. Letterman jackets are more often than not used in school settings. And in that context, varsity and letterman patches are usually made using chenille, as his website explains: https://www.ultrapatches.com/blog/post/what-is-a-varsity-letter.
Chenille is what creates those semi-rigid and fuzzy patches you often see on letterman jackets, usually with team names, numbers, and other big and bold images. This is what they are great at representing — chenille is great at big and bold designs. However, the material isn’t the best at rendering fine detail. And there is no rule saying you can’t use other types of patches on the jacket.
Embroidered patches are often used on letterman jackets, often alongside chenille. PVC patches can be used as well, and PVC is great at rendering detail with precise colors and even 3D elements. What type of patch you should use comes down to the look you’re going for and how the jacket is going to be used.