You start with an unfinished wooden box, this kind has an indentation on the lid that I've seen some people fill with tiles. I have never worked with tiles, so I just put a large daisy in mine and some plastic letters I found at Big Lots once on huge clearance, I think I bought six sets they were so cheap. I still have some.
To make the box, all I did was disassemble and paint pink. Then I decoupaged some cute girly paper on the lid. I used a border sticker around the edge of the lid, and then added a layer of Mod Podge over everything. I removed the plastic center of the flower and added some stitches to it to hold it together. A button was added for the center and then it was attached with hot glue. The letters are self adhesive but I added some glue dots to help make sure they wouldn't fall off.
The mini book is 4x6 and is accordian style. I made the front and back cover by covering chipboard and then attaching to the first and last page of the book. There is a page for each month. I thought a 4x6 picture cropped down to 3.5x5 or so would fit in nicely; then the number month sticker wouldn't be covered up and some of the pretty patterned paper would still show up. The strip of paper held down by brads is not glued on so that the picture can be slipped underneath it, if that's what the new Mommy wanted to do.Updated 3/1/11, Also added to Maryanne's & Christine's Baby Themed Events: