I looked this up on Google and see that the 529 Fund ranks at the top if the kid is to go to college. However, we also have another set of grandparent who will, I am sure, contribute to this fund. I also see UTMA and UGMA funds as options for college too. Those are the tax exempt funds. If they don't go to college... give the gift of money (up to $14,000/year) and let them pay the taxes? We would want to be the guardians of the account and have control as to how the money is invested.
Oh, BTW, the new grand baby is a girl! Short and stout!