The baby gift set is well on its way, even though I didn't finish the baby hat last night (I just didn't feel like seaming, but it will have to happen this weekend sometime). I am trying to make sure that the baby blanket, which is done as little squares looks as good or nearly as good from the back as it does from the front. I'm currently on the first strip, and I figure that when I finish the first strip, I will cast on the stitches for the second on and try doing it like the knitted on border for a shawl. This will be an experiment and if it doesn't work, then I will go and make all of the strips and then decide on the treatment.
The pattern suggests that you should mattress stitch all of the strips together (or all 48 of the little squares if you did them individually), but I know what my mattress stitch looks like from the reverse side. It isn't horribly ugly, but it is much bulkier than the rest of the garment. I imagine that while the seams wouldn't be uncomfortable if you were sleeping under the blanket the same couldn't be said for a baby doing tummy time and crawling over the blanket.
Maybe I'm making more of this than I need to. Regardless, the queens of the little squares to blankets are Kay and Ann of Mason-Dixon Knitting. I'm sure that I will find the information I need by looking at one of the previous blanket projects. Probably the cro-kay method.