here (there's a how-to video about halfway down the page). By the way, the site that the link above goes to is a great resource for all baby shower related items! I only did a two-tier cake for this gift, but if I were throwing the party, I might make it three-tier or bigger since it would be a decoration.
For the cake, I used the kind of diapers that the parent-to-be had on their registry list. It's best to roll them as tightly as possible and then tie the string around them tight as well so they stay rolled. To decorate it, I assembled things that the new parent would need. These could come from the registry list, but I happened to find things that went with the parents' theme that weren't on the registry. I noticed that the registry had a lot of basketball and duck themed items (big surprise, since my group of friends are all huge Oregon Ducks fans!). So, I sewed a little duckling toy to go on the top, got a rubber duckie bath thermometer and some baby wrist rattles for around the sides, and wrapped the cake in basketball ribbon to cover the strings. To keep the decorations in place, I used short wooden dowels (you could also use craft sticks). I taped them to the decorations, then slid the dowels in between the diapers to the middle of the cake. You can't see the dowels, and the decorations don't fall off!
Variation: A lot of the guests at the shower asked if the cake was made out of onesies or baby t-shirts. This would be another great idea, as a new parent can never have too many of these. You could decorate each of the onesies before rolling it up, or just leave them plain. This could really be made out of anything that you could roll up (that would stand up and stay rolled).
A note about hosting Showers: If possible, it's nice to be able to use things for decorations (or for games) that you can give to the Mom after the shower since she'll be able to use them very soon!