I finished the baby towel. I don't know if I will make another one any time soon though. It was easy and knit up quick, but it was SO BORING! Nothing but garter stitch the whole way through - yuk! I used Bernat Cotton Handicrafter yarn, which is really cheap, and once I washed and dried it, it thickened up and softened nicely. Here is a photo of the finished product:
I couldn't pick my next project, so I just started on a baby hat. I had some pretty blue yarn to use, so I figured I could make it, and one of the two friends still expecting, or even myself, one of us would have a boy!