This is my first attempt at a baby blanket with a crocheted edge. I found some flannel at JoAnn's last year that I have been saving (the colors are so much cuter in real life; a very pale yellow and lavender). I punched holes around the edge with my tiny scrapbooking hole punch and then ran a chain stitch around the edge. Then I made up my own pattern for a slightly scalloped edge. I did two single stitches, one half double stitch, four double stitches, then one half double stitch and then started again with the two single stitches. When you get around to the beginning of the blanket you just skip or add some stitches to end right.
I don't think you need to serge around the edge and I don't really like the look. So, I'm researching how to prevent fraying fabric in the future. I purchased a skip stitch blade for my rotary cutter. That should quickly make the holes evenly spaced. I'm always on the look out for baby gifts and of course, for my grandma stash!