Once you've decided to use cloth diapers you can be extra frugal and make your own. There are many patterns and ideas on the internet but the simplest solution is to buy some receiving blankets and use them as flat diapers that you fold and pin on. The edge will come serged and they are the right size and fabric for diapers. Alternatively you can buy flannelette and then serge or sew down the edges. For added simplicity you can prefold the diapers and then sew them into shape so that you don't have to fold them with every diaper change. The origami diaper folder illustrated here lends itself particularly well to being sewn into shape. You simply need to sew around the centre "rectangle" on the folded diaper. I did this with my receiving blankets and it worked very well.

You can also make your own diaper covers. Polar fleece and wool are both water resistant and can be sewn into diaper covers. The first link below has a large list of free patterns for homemade diaper covers.