I saved this tutorial months ago and finally had the right occasion to make my some baby cucpcakes, the Sugar and Spice baby shower we threw last weekend.
The white puff in the middle is a bunched up onesie. You could do white, colored, or white with applique designs like I did. The pink portion is a receiving blanket rolled up around the onesie.
A rubberband is placed around the rolled up blanket to keep everything in place and then it is sat inside a coffee filter which looks like a cupcake liner.
I made them a few weeks before the shower and my 2.5 year old daughter would walk by them everyday and say, "yum yum yum". Glad to know they look like a real cupcake!