Here's a fun post from Jeannette about how to make a baby bonnet from a vintage handkerchief. This is actually perfect timing as a woman from church recently gave me a stack of pretty hankies for just this purpose. I imagine you could also use any type of fabric if you started with the same dimensions. Jeannette also has some really wonderful recipes on her blog if you're looking for something new and tasty.
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This morning I shipped off a package to my sister for my new little niece. I made her a bonnet to wear as she's given her name and blessing in church this upcoming Sunday. It is different religiously-- but could be considered similar socially-- as a baby christening in other religions.
As
requested, I made it from a pure white handkerchief. I found this
vintage handkerchief with a pretty flower and design embroidered in the
corners.
I washed it by hand, and-- since it was very soft
from loving use--I added some liquid starch to the rinse water.The measurements for handkerchiefs will vary (particularly whether or not they are lined with lace), and the measurements can be altered a little, but with the wrong side facing up I folded one side back about one inch, and the other side three inches. (Then the right side is mostly what is showing upwards.)
Thread
a needle with two lengths of white thread and knot all four loose ends
together. Along the edge of the one inch fold sew a long, loose running
stitch.
Pull
on both ends of the thread to gather the edge and form the back of the
bonnet. Tie the ends of the thread together to secure and trim the
ends. 
Fold and iron under the corners on the front of
the bonnet. 
Secure
a length of ribbon to each side with minimal stitching. I incorporated
a grouping of seed beads. I've also seen people use a small silk
rosette. When I made a bonnet for my sister's first daughter I looped
the ribbon into three small loops and attached it to the outside of the
bonnet. 
Trim the ribbons to your desired length.The neat thing about this baby bonnet is that in 20 years or so, she can snip the three threads, and have a beautiful handkerchief for her wedding that she wore on her blessing day as well.
This is the bonnet I made for her big sister's
blessing. (Her handkerchief was not embroidered--it just had a beautiful lace edging. So when I did the running stitch on hers I actually did it along the wider 3 inch side. That way it brought the double row of the side-by-side lace edges towards the front of the bonnet for decoration.)
A beautiful keepsake.
