My newest niece will be seven months old in December, and my mom wanted me to make her some ornaments that would be safe for her to put in her mouth. I've had this penguin fabric for a while now, and it seemed ideal for baby-safe ornaments. Each ornament is like a tiny 2" x 3" quilt, backed with plain red or green fabric. My favorite penguins are the ones wrapped in lights.
ETA: Here is the finished tree all lit up and penguiny!
2015 Update - Claire (18 mos.) helped decorate the penguin tree this year: