For my very close friends, I usually knit a baby blanket. I actually have one in progress right now, for my next-door neighbor and her new daughter. I knit 11 squares, then said to myself, "She's not due until April, it's only January, I have time" and put it away. Before I knew it, it was April, and I got an email saying "Baby _____ has arrived!" Oops.
I've knitted the twelfth square and I'm in the process of sewing the squares together. With any luck, I'll be done before Baby _____ goes to college.
For other friends, I knit cotton washcloths, or I buy onesies, toys, receiving blankets, etc. If I buy clothes, I buy 6mo, 9mo, or 12mo clothes. A big baby sometimes won't fit into newborn clothes.
I love that "Wheel of Responsibility" ! If I were to have a child, though, I'd make my own - with every spot labeled "Dad".