Ahhh, cute little babies looking like cute little grandparents. We love to see it. I'm a BIG fan of this cosy, almost Victorian-sleep-cap look. What a good excuse to make your baby look like an elf. A jumper, a cardigan, the hat, and a blanket, all in one easy-to-follow pattern. Perfection.
We're going to recommend King Cole Cherished DK for this, as it's a gorgeously soft baby yarn that's as hardwearing as it is pretty. You'll need 3.75mm and 4mm needles along with some buttons/toggles.