Wearing Gucci loafers and a suede-fringed jacket, that gal looks pretty stylish. Even with those diapers showing. Make no mistake--we're talking about baby and toddler clothing here. And with high-fashion designers like Tom Ford at Gucci and myriad new names cropping up every season, the little tykes may be on their way to the best-dressed lists. "Everything you see in adult fashions is trending down to baby," says Stephanie Thompson, owner of the upscale children's store Cradles of Distinction in Chicago. "Whether it's vintage jeans or a faux-fur jacket, the fashions are funkier than ever before." Indeed, the well-heeled little people today have many more options to explore than just OshKosh and Laura Ashley. Boutiques and upscale department stores are exploding with super-trendy designer clothing as well as sophisticated items like $400 cashmere baby blankets, imported T-shirts from France, and clothing in former adult-only shades of navy, gray, and brown.

For Fall, expect to see leather suits and dresses in the wildly popular animal prints like cow and leopard and even pashmina shawls. Like European kids, babies and toddlers on this side of the Atlantic are even sporting perfumes. That's right, baby perfume. Sound extravagant? Depends on whom you ask. These days, Americans are feeling wealthier and more affluent, some perhaps not fretting about spending $90 on Gucci baby booties, $300 for a suede-fringed jacket, or $10,000 to decorate their newborn's room. "This is a trend that has been gaining momentum," says Kurt Barnard, a retail forecaster and president of the Barnard's Retail Trend Report. "People are feeling free to spend on their kids, treating them well and not trying to penny-pinch." At the ritzy children's furniture and clothing store, Bellini, in Chicago's Lincoln Park neighborhood, owner Jamie Schachtel says new parents often want to create a specific look for their baby and toddler's room. Typically, the price of this look can range from $10,000 to $20,000 on the high-end. Of course, this includes the basics - baby crib, linens, changing table, and glider rocker. But choices like hand-painted sleigh cribs, designer linens, coordinated hand-painted changing tables, custom window treatments, and hand-crafted chandeliers will determine the price tag.

"Baby things are incredible--people have to have them when they walk in," says Schachtel. "And for the first-born, the sky's the limit."

Baby Room on the Cheap versus Deluxe Baby Room:

Basic baby room from Babies R Us

Crib $500
Dresser with changing table $600
Linens $200
Glider with ottoman $530
Total $1,830

Imported sleigh crib from Italy with mattress $1,000
Handpainted dresser with changing table $2,100
Bed linens $900
Sleigh Glider with ottoman $765
Total price $4,765