All the books people have mentioned are great. I'd add "goodnight Gorilla" and "Peekaboo Kisses" (especially once they're slightly older and can get into the peekaboo/touch-and-feel aspects). For the Eric Carle books, I particularly like the "Brown Bear, Brown Bear" series (there are several in it), the classic "Hungry Hungry Caterpillar" of course, and "From Head to Toe." "Runaway Bunny" is a classic too. And "Counting Kisses." There are so many great board books out there...
For CDs, my mom gave me several lullaby collections that she got from Music for Little People
that I really like. I think I have an African Lullaby collection, a Latin American one, and several English ones that have really good songs on them. Our baby is too young to care about words yet, but my friend who has a 2 1/2 year old, says her daughter adores Laurie Berkner.
Toys: DD is only 4 1/2 months, so anything seems like a toy to her - we've mostly just been going with whatever people gave us and she seems to like them. Sophie the Giraffe (which I like since it's rubber and has food quality paint) is a particular favorite. And she loves a lamaze cloth cube with lots of fun handles and a couple teething rings. And some Whoozit ones. And a few soft stuffed animals that are small enough she can chew on them well. I'm sure as she gets older, all the classics: stacking rings, stacking cups, wooden blocks, shape sorters, boxes, pots, etc. Oh, she also really does love her play gym - she can spend forever pulling the dangling soft toys down and into her mouth and it gives her good exercise rolling around to get them.