I’m admittedly a bit of a fiber snob, but not for baby clothes. Baby clothes have to be washed a lot, preferably by machine, and they won’t be worn long enough to get that ratty look synthetics get.
They don’t take long enough to knit that this should bother you.
So baby clothes should be made with baby yarn. Make sure it doesn’t feel nasty, as some synthetics do, and get knitting.
The sweater here is made from Bernat Softiee baby yarn in pale gray and white tweed. I’m knitting this first to get a sense of how much yarn it will take. The mint green in the picture below is intended for a traditional knitted layette set: matinee coat, blanket or shawl, bonnet, and booties. I also bought a gorgeous dark coral for a lovely little lace matinee coat if the baby happens to be a girl. You can see that the yarns tone nicely with the quilt supplies.