I like Caron Simply Soft for baby items. It's machine washable/dryable, soft, and easy to find at Walmart/AC Moore/Joann Fabrics/Michaels.
There are tons of patterns that will use only garter stitch, which is all knit. I think garter stitch is under-rated - it's quite elegant on it's own. If you're up to learning some new skills, some yarn overs and knit 2 togethers wll add rows of lacy holes. If you learn how to pick up stitches you could do a nice log cabin garter stitch blanket. And you have plenty of time to master the purl stitch which will give you even more choices.
Heres some patterns and some places to look for more:
you have to join, but it's free and has litterally a ba-zillion paterns, free or for purchase.