Cotton wool, ultimately key ... (5)
I believe the answer is:
lisle
'cotton' is the definition.
(I know that lisle is a type of cotton)
'wool ultimately key' is the wordplay.
'ultimately' indicates one should take the final letters.
'key' becomes 'isle' (key can mean a small island).
The last letter of 'wool' is 'l'.
'l'+'isle'='LISLE'
(Other definitions for lisle that I've seen before include "Strong tightly twisted cotton thread" , "Pedestrianised city" , "Strong cotton fabric" , "Maker of hose" , "(Fabric woven with) a fine cotton thread" .)