I never used talc on my kids (14, 10, 9) because I was aware it was bad for their lungs.
There's also a link between ovarian cancer and the use of talcum powder, but not cornstarch powder.
Blondie, maybe not everyone from the baby powder generation is ok...my sister is having surgery this week for possible uterine and/ovarian cancer...who knows the cause...there's no other history in the family that we know of. When there appears to be an increased risk it doesn't mean everyone gets it, but I think it does mean people should consider looking for other options.
Here's other info from an article I found:
by Robert W. Steele, M.D., a board certified pediatrician at St. John's Regional Health Center in Springfield, Missouri. He graduated from medical school at Vanderbilt University School of Medicine in Nashville, Tennessee.
The use of baby powders is rather common although many parents have switched to using ointments. Reasons most parents give for preference to powder is the feeling that the powder absorbs moisture better and prevents friction between the baby's bottom and the diaper. However, after decades of use, powders have fallen out of favor by the medical community for a few reasons:
Talcum powder is usually made up of various combinations of zinc stearate, magnesium silicates, as well as other silicates which are finely ground. The size of particles is so small that they are both easily carried in the air like dust and can reach even the smallest areas of the lung.
There have been numerous reports of babies having life-threatening episodes from inhaling the powder. And in fact, there have been many deaths reported from aspiration of the powder. A good number of these cases occurred during a diaper change when adult supervision is usually very high. But as every parent knows (including myself), infants and toddlers can be awfully quick sometimes, so reaching for and spilling the powder bottle is not such a hard thing to do for the little ones.
The feeling from many dermatologists is that there isn't much advantage of powders as compared to ointments when it comes to preventing and treating diaper rash.
So, clearly talc can cause pneumonia, inflammation (or swelling) of the airways of babies, and even death. But what about cancer? When the link to asbestos and cancer came to light, it was noticed that a lot of the exposure to asbestos was accompanied by other inhalable fibers and dust including talc. However, a specific link to talc exposure and lung cancer has not been established. On the other hand, there has been some interesting research into a possible link of talc to ovarian cancer.
For a number of years now, epidemiologists (scientists who try to establish cause and effect relationships in diseases) have been interested in trying to find some link to the environment and ovarian cancer. Some of their focus has been on talc powder because it is a product that is commonly used in the groin area by women. Several of these studies have shown a possible link between talc powder use and ovarian cancer while other studies have not. One interesting study published last year (1996) was done by examining the ovaries of women who had had them removed for reasons other than ovarian cancer. In that study, talc powder was found in all the ovaries including the ones from women did not use talc powder on themselves. This suggests that talc powder could reach the ovaries of women who use talc powder on their babies.
The relationship between talc and cancer is by no means certain. It may turn out there is no relationship, on the other hand, it could be an important contributing factor in the development of ovarian cancer. More studies need to be done. Currently, there is absolutely no hard evidence to suggest talc powder use causes cancer in babies. However, the immediate danger of inhaling baby powder is clear. Therefore, I would discourage the use of baby powder.
I used it after every bath on both my kids and they never had any problems. And you are right, nothing smells better than a clean baby. 
