I've also seen that about Woolite (whatever that is). Human shampoo is fine because it is slightly acidic, great for wool. Baby shampoo is near neutral for wussy baby eyes, not so good. Soap is alkaline, terrible for wool but good for cotton. I use any basic adult shampoo lying around, not the very cheapest $1 stuff (might be nasty) but plain supermarket brands are fine.
You know how soap helps felting? That's because the alkalinity makes the scales stand up on wool (= rough). Acidity makes them lie down smooth.