Hi, Congrats on your baby! You must be so excited to see your little bundle.
I've made lots of rag quilts. For baby quilts, I use 5 inch squares. Cotton or flannel or a combination of both. I use flannel or muslin for the filling. So for each square that you make you will have three, 5 inch squares a front and a back and a filling of flannel or muslin. I sew diagonal thru each square from corner to corner, twice. Making a X in the center of each square. I leave a half inch seam allowance and snip seams as I go instead of waiting till the end of making the quilt. Hope this helps.