I'm a new mother (my little girl is 3 months old). One of our favorite gifts we received for our daughter is the quilt that someone put their time and love into. We don't use the quilt for sleeping, but we do use it every day for tummy time, covering the car seat when it is colder outside, and once our little girl is big enough for a toddler bed, It will be used for sleeping. Go ahead and give the quilt, it will likely be cherished.
If you are concerned about flammability and the harmful chemicals used to make the batting non flammable you could always use a batting that is 100% wool. Wool is naturally flame retardant.
Deaths by Sudden Infants Death Syndrome have gone down by 50% since we've stopping putting textiles in the crib and Putting babies to sleep on their back. While many will survive even if you don't follow that advice, if following it stops more families the heartbreak of the loss of a child/grandchild/etc. It just makes sense! The hardest funeral I've ever been to was the funeral of my sister's best friend's 6 week old son. I wouldn't wish that pain on anyone. But that doesn't mean that a quilt wouldn't be used (in a safe way) or cherished by the family with the newest addion to their family.