I have made quilts for all three of my babies! I have embroidered and pieced them. I got my son's images out of an antique coloring book - so cute! His quilt was blue and brown. My first daughter's quilt has sunbonnet girls embroidered on muslin blocks and then pieced together! For the fourth child (in the next two years) I am going to make a postage stamp quilt with itty bitty squares. It will take a while, so I am starting now!!
I would avoid doing anything trendy, such as characters or things like that. It will look dated eventually and hopefully you'll have it around for a long time! Also, use bright, fun colors, and use a medium hued, small print backing because it will get very "loved." Good luck and have fun!!!