You can use any yarn that you like. I use cotton yarns for baby blankets but this also makes a lovely lap blanket for the winter when made of wool or another heavier yarn.

Gauge isn’t important, you will want to increase your hook size and swatch if you choose a yarn that is not a worsted weight. You want to go for a very nice drape so it feels like a warm hug and not like they are laying under a rug.