Here is another baby blanket I made using a round edge instead of a square corner.
I had found this cute apple fabric on clearance and had to get it b/c it is pink and red. I then found the pink fuzzy backing on sale, too. This probably cost me about $5 to make!
Here's what I did: When I was cutting the fabrics, I just used a saucer (from my kitchen) to round the edges. I sewed the two fabrics together (right sides together) like normal, leaving a hole for turning. Then I topstitched the edge with a zig-zag stitch.