Burp Cloth Tutorial - It would be great to embroider or applique a design on the fabric panel. Another idea is to use a soft, absorbent flannel as the middle panel. I'd finish the edges a bit differently too, but still a great tutorial.
This can be easily done using jelly roll strips and cut some in half then sew a few of the matching strips together to get an off-set stripe pattern. Appliqué the baby's name to personalize it. You can buy ready cut letters in any fabric store.