I'm working on a baby blanket too, using 4 skeins of Cestari (http://www.yarndex.com/yarn.cfm?yarn_id=416) I got at Circles for under $30! It's a wool/cotton blend that doesn't felt and can be machine washed using the gentle cycle.

definitely do not spend $100 making a blanket that will be thrown up on, pooped on and chewed. Hopefully not in that order....

:-)

hope you are doing better....

Cheap cheap me, Katherine, I like to use Bernat Softee Baby - around here (California) they cost less than $5 a skein and only need 4 to complete a decent sized blanket. It's not the softest yarn at first but gets better when it is washed. Good luck.