Knitting for Baby (by Melanie Falick and Kristin Nicholas) is my go-to book for baby gifts. It has 30 patterns that range from quick-knit booties to detailed sweaters. I wouldn't recommend it as the very first book for someone interested in teaching themselves to knit, but anyone who has spent a little time with a basic instruction book will find achievable projects here.
The patterns are clearly written and easy to follow, with plenty of charts and schematics where they're needed. The chapters are arranged by technique, and each one has great tips and instructions. You'll find projects for colorwork, circular knitting, cables, and more.
This is one of the best photographed knitting books that I own. The pictures are amazing, but more importantly they actually show off each project well. I'm always disappointed when an otherwise great book includes gorgeous, artsy photographs that don't show enough detail to be useful, thankfully that's not an issue here.
Of course part of the reason that the photos are so fantastic is that the designs themselves are attractive and have a very classic look. You could probably pull Knitting for Baby off the shelf twenty years from now and choose something that would be a hit at the next baby shower.
I've been using this book with great results for several years now, I think anyone who likes baby patterns should give it a try.