In the grey bright white thread
might work, but I would probably go with black. Honestly, it looks really cute to use just a small amount of black on baby/kids' quilts because it really makes the bright colors pop!
No, I do not like the Hera markers at all. I can't see them well enough. I have nearly 20/20 vision, but somehow I am practically blind when it comes to quilting! Haha! I've tried almost everything except the Frixion pens & colored chalks. That said, each quilter needs to use what s/he is comfortable with. The way you use the Hera markers is just to draw lines (or boxes) showing where your letters/designs fit. I don't think it would work to write out the words. It just creases a line in your fabric for you to follow. One of my favorite quilt artists, Heather Thomas (National Quilters Circle) swears by the Hera markers. It's all she uses because she never washes her quilts so she needs something that doesn't need to be washed out & the only guaranteed options for that are (1) Hera markers, and (2) Golden Threads paper.
Here's what I'd use in order of preference for a grey background:
(1) Crayola
Ultra Clean marker in black (
http://www.walmart.com/ip/Crayola-Ul...Count/35434871) note: the regular Washable markers do not come out quite as easily. Ultra Cleans are the best! They sell them at most major stores & some craft stores.
(2) Dritz water soluble pencil in white (
http://www.joann.com/white-water-sol...prefv1=Product). Available at craft stores & the fabric section of Wal-Mart. Also need a basic manual pencil sharpener.
(3) Golden Threads paper (
http://www.amazon.com/KeepsakeQuilti.../dp/B00KCR4DT0). Available on-line & in some LQS. Also recommend a Sharpie marker.
Unless you have one of those sewing machines where you program in the lettering & then it runs entirely by itself, there are a few other things to consider. Quilting your quilt without marking it is a special skill. Lots of people do it & I am starting to reduce the amount marking now, too, but as a newbie, I found it very helpful to draw out my designs directly on the fabric first. The marks will get washed out so I don't worry about hitting them perfectly, but they give me a guide to follow.
There are a lot of wonderful posts on the forum about Free Motion Quilting. You need a darning foot (also called a free motion foot) for your machine. I also strongly recommend something to grip your quilt. I use Machinger's quilting gloves, but you could always just cut the fingers off a pair of grippy kitchen gloves & use those. And if your budget allows, I'd also get a Supreme or Queen slider (mat) because it will help your quilt move around more -- make sure to lower or cover your feed dogs if you use a mat or it will chew up your mat. Finally, be sure to buy the size of needle that matches your thread. Generally, for a 28wt thread, you'll want a 90/14 quilting needle (or some people prefer a Microtex -- aka Sharp -- needle). If you don't want it to show up so much, you could use a 40wt thread with a 80/12 needle. Put in a fresh needle when you start & be sure to oil your machine as indicated.
Most importantly of all -- whether you are doing the writing free motion or using a computerized machine to do everything for you -- I would suggest buying at least 2 yards of inexpensive fabric and some extra batting so you can practice first. I remember how hard it was for me just to learn how to do a basic 2" stipple/meander. When I tried to write out my given name -- Sabrina -- it ended up a boxy, jagged mess & I 'd hate for you to have that on such a beautiful quilt. A few quilts later, I am now doing feathered wreaths, orange peels, leafy vines, circular fills, stars, hearts & quilted words ... but it took me quite a bit of practice to understand how to move my quilt in order to produce the designs I wanted. FMQ is so beautiful, even when it's only mediocre, and I definitely want to encourage you to put all those lovely words on your grandbaby's quilt. Just be sure to practice on something that you don't care about first. I mostly learned online and pretty consistently heard that it takes about 8 hours of practice to be able to get decent enough at FMQ that you feel comfortable putting it in a nice quilt. You might want to make a couple practice 1 yard quilts that you can give away to charity. Pick a solid fabric & a thread color that will really show up, mark as desired & then start quilting! Don't bother to rip things out. Just keep quilting & learn from your mistakes. And ask questions here on QB if any come up while practicing.
Good luck & have fun!!!