One of my favorite gifts to make for babies is a simple fabric block in bright colors. Babies seem to love them, and even almost-three-year-olds seem to still enjoy theirs, mostly throwing them around or during role playing.
They are also quite addictive to make, especially since every time I am nervous that the corners will come out wrong, but magically they always come out just right. What a thrill! I recently made a bunch of them for some little ones, and they were enthusiastically received by both parents and babies.