For my newborn, I wanted to use only natural and organic materials. I purchased some organic undyed sherpa and hemp fleece from http://groups.yahoo.com/group/cloth_diaper_supplies/ for around $10 a yard, and made my own diapers and baby blankets. The blankets were very simple, I got out my handy dandy rotary mat and cut myself out several layers. I took two at a time, straight stitched them together wrong side out, left a small hole, turned it right side out and stitched up the hole, and in a half hour I had the safest (and softest ;) baby blankets you can have for around $5 each.
For the diapers, I used the shape I wanted (I traced around a previously made diaper but you can find tons of diaper patterns online), cut it out, used the remnants to add thickness to the heavy pee spots in the diaper (the front for my boy but you would center it for a girl), stitched it in place on the wrong side, then stitched the whole diaper inside out leaving a small hole on one end. Then I took elastic and sewed it down around the leg openings and on the back. Turned it rightside out, stitched up the opening, and voila! A very inexpensive og cloth diaper. The extra remnants I had I made diaper liners with. You don't want to make the diaper too thick itself cause it'll never dry. Oh, and most importantly, I use a Snappi to keep it together. If you cd and don't have a Snappi- Go buy one! They're unbelievably wonderful! I've tried snaps and velcro and neither one hold up. Snappis or good old fashioned diaper pins are the way to go!