My husband's brother's wife (ie my sister-in-law) had a baby girl two weeks ago. She was 4 weeks early, had a miraculous 3 1/4 hour labour which started just two hours after she finished her last day at work! Baby Jasmine was just over 6 lb and very cute!
But I was not prepared with any handknits! It took a few days to find the right pattern and yarn but I finally settled on the very cute Camilla Babe (3 month size) and, because I had yarn left over, the Small Things Bonnet (newborn size). Both patterns were lovely, the bonnet in particular was very neatly constructed.
Ravelled here and here.