Just wanted to put in a word for using cloth soon or right away, too. We used cloth from the start, and it made me really happy to be putting soft, friendly cloth on her little bottom instead of (what felt to me) unfriendly disposables. Since I was pretty weepy for a few weeks after she was born, anything that made me happy was good! We used flushable liners for the first week or so, since EVERYONE, even cloth-diapering siblings, warned us that newborn diapers are horrible and sticky and we should use disposables for a month or so. It wasn't so bad, actually, and the liners made it even easier. We used flats or small prefolds, and just folded them down to size. The only thing I would do differently is that we didn't get newborn-sized covers because all my sibling's kids were almost 9-almost 12 pounds at birth. So my LO was a tiny 7 lb 6 oz, and her "small" covers were pretty big on her at first! But it still worked. The other thing is that cloth diaper are so, well, FUN!!
We did the olive oil thing, too, and I really recommend it. We just oiled her right before putting her fresh diaper on.