Friends are always coming to me for ideas on great baby gifts. I think back to what gifts I loved and they generally fall into two categories: one of a kind personalized gifts and the practical gifts that got a ton of use (like a cute baby towel).
Once you find a great newborn gift you can easily give the same gift over and over to all your friends as they have babies. For a while my trademark gift was a monogrammed blanket (included in my list below). I also love giving other personalized gifts like burp clothes or outfits with baby's name on it - Momo Baby Gifts is a really great store for personalized gifts (and you can use code SAVINGS91 for 30% off orders of $25 or more placed by Jan 31, 2010)