The receiving blankets I make are my most popular baby present. I generally use just one layer, though for a winter baby I sometimes make one two layer one. I cut the fabric WOF and as long (generally only 40-42 inches these days). I just double-turn the edges and use a decorative stitch, generally a feather stitch though just a nice wide zigzag looks good too. If you have a varigated thread, that just adds to the fun. It is easier if you round the edges rather than having straight corners. My son has twins, just under 2 years old, and they still use the receiving blankets! When I made the first 6 of them, he thought that was wayyyy too many. About 2 weeks later he asked for another 6 or 8 <grin>. Very useful items.
I sew with a group that does flannel receiving blankets for the local NICU. Those are double layer, and we sew them with a straight stitch, birth them, then finish with a decorative stitch. These are washed dozens and dozens of times in hot hospital washers, and they last a long time. The key is to use good flannel and pre wash them.
Pam