Welcome to the addiction.
IMHO (in my humble opinion)
1) I would not use wool or other animal fiber in new born knit items. You do not know of potential allergies and unless the wool has been shrink proofed (superwash) it will be a pain for the mother to clean. Since new born rug-rats like to make messes cleaning can be important.
2) I would start with a simple garter stitch baby scarf (winter is coming and it is small and quick). Garter stitch is simply useing the knit stitch over and over to the end of the row, turn your work and use the knit stitch back to the other end. To do this you will need to know how to cast-on
(look at the tabs at the top of this page, great learning tools under the Free Videos
tab). Knit the knit stitch
and then casting-off
The garter stitch gives a nice heavy blanket that is very warm. As the baby grows and your skill grows you can give fancier knits as gifts.
3) Technique - do not worry about this in the beginning. There seems to be hundreds if not thousands of way to do the same stitch, increase etc. Pick one to start use it to complete the project. On the next project you might want to try another technique, keep trying techniques until you find one that you like and keep going back to. Ask three knitters how to do some thing and they will give you five answers, all of them right.
4) Now move on to a baby blanket that uses both the knit and purl stitch. The knit and purl stitches are the foundation for all stitches in knitting.
5) There is nothing difficult in knitting, just techniques that have not been tried before.
DO NOT be afraid of anything we are all here to help.
Knit well and post pictures.