Here's a sweater and hat I made for a college friend's first baby. I really enjoyed this Sirdar pattern. It has a variety of necklines to choose from, I used the roll neck. Also this yarn is really soft and, I think, great for a baby gift, being washable and all. I'm not so much into pastel pinks and blues for babies (or anyone, really), so I chose a light sage green.
This pattern has sizes from 3 months all the way to 6 years, so I'm planning on making the sweaters (if not the hats as well) for my boys.
A bad night photo of the set with the pattern (which has the most adorable baby EVER on the cover!):
Closeup:
click to enlarge
Just the hat:
click to enlarge
Pattern: Sirdar 1648, Snuggly DK, size 12 months with roll neck
Yarn: Plymouth Dreambaby DK (50% acrylic, 50% nylon) in Light Sage (#125)
Modifications: I did an i-cord knot on the top of the hat instead of a pompom.