My mother saved some of my baby clothes, and when she took them out of the attic they were old, stained rags. They went straight to the trash, and she was disappointed that she'd thought she was saving something good. Heat and time did their damage, and they brought out stains and dirt that were deeply embedded in the cloth.
I have saved ONE BOX of things -- smallish box, think copy paper -- for each of my daughters. I saved them each one maternity outfit, their homecoming outfit, their first Christmas outfit, and a couple other things that I thought were special. I also saved some little things like a few blankets, some small toys, bowls and small spoons that I enjoyed using.
I read up on how to preserve these things, and here's what I learned: They need to be washed TWICE -- once with detergent, once without -- then wrapped in white tissue paper. Every year you need to take them out of the box and wash them with NO detergent. Also, you're suposed to store them inside the house in a comfortable temperature (I have mine on the top shelf of my masterbedroom closet). Finally, you're supposed to store things like this in a wooden or cardboard box -- never plastic. I forget where I read this and I can't remember the "whys" that were connected to it all, but it's supposed to keep things in decent shape. So far my small collection is in excellent shape (though my oldest is only 16, so it's not like they've been stored a long, long time).
The idea of my girls using these things with their own children is something of a long shot. They could end up having all boys, or they could have children born in the wrong season to fit these clothes. Also, styles change, and they'll certainly want to pick their own things. But I like knowing that I have ONE BOX of things for each girl. One box isn't cumbersome to keep, and I intend to give these boxes to my daughters when they announce that they're having a first baby.