Thanks to Shannon for this Frugal Baby Tip!
You can make your own diapers using old dish towels, bath towels, extra receiving blankets - any absorbent cotton fabric will do. Fabric stores often carry diaper flannel or "birds eye" cloth to make diapers with- sometimes it is behind the counter and you have to ask for it. The easiest style of diaper to make is the prefold - just cut out pieces about 14x18 inches put a few extra layers in the center and zigzag stitch together.
You can get a pattern for a fitted diaper with velcro closure through Elizabeth Lee Designs (they also carry patterns for nursing dresses and tops!) There may be other sources as well but these are the two options I know.