Dale of Norway's Baby Ull is pure wool but soft enough to go next to a baby's skin. The color selection and pattern support are unparalleled. Yes, the gauge is fine and the needles are small, but every piece you make with this will be an heirloom. (No new babies on the way? Consider a lace shawl for yourself.)
Dale of Norway's Baby Ull is 192 yards per 50 gram ball. It is 100% machine washable merino wool. Knits at 8 stitches per inch.
Each ball is $6.40, plus $.50 shipping; colors shown below.