"When in doubt, ask" is always a good motto. Buying gifts for babies is no exception. If you are stuck, and don't know what to get, you can always ask the baby's parents, or if you want to keep your gifts a surprise, think about asking grandma! She will know what to get. You know how so many people make a point of giving pajamas for Christmas? Newborns never have enough PJs, so a soft, beautiful pajama set will no doubt be welcome even if the baby will get lots more of them. If you want to go the baby clothes route, consider something in a bigger size. Babies grow really quickly, and there are probably lots of other "guest Santas" all buying similar things for the baby in question. At least, when you get something for next year, your outfit will have more chance of being used.
Depending on your budget, bigger items that are great for parents and babies alike make the best Christmas gifts. Think about a nice baby carrier, cloth diapers, a nice diaper bag, or even a vibrating baby swing. Wooden blocks are a great gift, because the baby can have fun with them for many years to come. Also look at great Christmas gifts for expectant moms!