I sometimes have a difficult time parting with my baby girls' cute wardrobe pieces especially the pieces drenched in bows, polka dots and lace. So in a quest to not be "that mom" who collects evertyhing of her child's I've resorted to employing alternatives....
Quilting! This can be a tangible time line of your child's growth and can provide a teaching moment in story telling. Share with your child about the shirt they wore their first day of school, the pretty dress worn at their christening, or the fabric they were swaddled in their first day home from the hospital.
Shadow boxing: I love this idea because this can be an interactive project between parent and child. Take memorable clothing, favorite toys, hospital documents, and hand/foot prints placing them in a three dimensional frame in the child's room.
Doll clothes: if your child has a doll that's dear to them allow them to use their baby clothing as dress up pieces for their doll. This will also save you money in not purchasing unnecessary doll accessories.
And for you moms who have no qualms with parting with those precious pieces there is the option of consignment! Sell your baby's clothing and earn cash to shower upon them more gifts...or buy yourself something;)