I made my son a taggie blanket, otherwise known as a "lovey" so he has a comfort item in his crib. I used your typical quilting fabric on one side and a soft fabric from the baby section of the fabric store on the other. As far as the ribbon goes, you can use whatever you have. I think it looks cool if it is not too matchy-matchy and all different colors gives visual interest.
1. Cut the desired size square or rectangle or both fabrics
2. Fold edges inward
3. Pin ribbon pieces to one fabric on the inside
4. Pin the other piece of fabric on, hiding all raw edges
5. Sew around entire square (I triple sewed the ribbon parts to be safe)
6. Tack-sew five spots on the blanket so you don't get a balloon shape (and so it lays flat). I did a pattern like the "5" side of a dice
7. Heat seal the ribbon with a lighter
Always watch your kids around the blanket since it is possible the ribbon could come loose!