I also used one of my favorite yarns for baby stuff, Lion Brand Cotton-Ease. For a cotton yarn, it holds together well (minimal splitting) and it has good stitch definition. I like the nautical blue and cream colors for a gender neutral little outfit. I figure I'll put it with little red maryjanes and a red onesie for a girl, or these cute Chuck Taylor sneakers (for either sex)--which I'm finding out in a few days!
Overall, it turned out pretty well, although the sweater ribbing skews the stripes a bit--I always seem to have this problem with the placket ribbing shrinking in.
See my Ravelry project pages for the Longies and the sweater.