We cloth diaper. We started CDing my son at 4 months old. This time around, we plan on doing it from day 1. When DS was a newborn, he was constantly having blow-outs in disposables. We would bring 3 safety outfits wherever we went and we used them too. So many accidents. Once we started using cloth diapers, all that stopped. They hold in the poop so much better.
We have a large stash of prefolds and plenty of pocket diapers as well. We use the prefolds in the house and we use the pockets for when we are out of the house. My daycare is totally accepting of them. (I find the All in One and Velcro work best with daycare.) I bought some used, some from babysteals.com and some from jilliandrawers.
If you're new to CDing, I recommend doing Jillian's Drawers trial program. (http://jilliansdrawers.com/products/clothdiapers/tryclothfor10) You can try the cloth for 21 days and return them. You just have to pay for shipping and a $10 program free. If you like the diapers, you can keep them ($161) or return only the ones you don't want. It's an excellent way to experiment with different kinds. We never thought we would want to use prefolds, but through the trial program, we realized that they were easy to use and launder. Plus, they were the cheapest option. JD will mail you out the diapers up to 3 months in advance of the birth, so you can launder them and have them ready to use.
Another great resource for cloth is http://alphamom.com/
Do a search for cloth diapering. For some reason, it won't let me directly link.
Amalah has written several posts on CDing and she makes it accessible and fun.