We're US citizens, so it may be different for Canadians, but we have never been asked for ID for our daughter when flying within the US. Adults have to present ID to get on the plane, but we've never needed anything for our daughter (though we always carry her passport, just to be safe.)
Where you are going to run into issues is at the border (it sounds like you are driving down to the States and then flying, correct?). I would FOR SURE get a passport in that case, because it is just not worth getting turned away. US citizens can't cross the border without one, and while it may be different for Canadians, I think it would save you a lot of time and hassle.
This is a big enough issue that we have a baby due on Oct. 4, and we are going to have to send away for her passport pretty much the day she is born and expedite it so that we can take her to the States for Christmas. Our aunt got passport cards, instead of the full-blown passport, for her kids, and they are basically useless. She was able to use them when we went on a Mexican cruise that departed from California, but if she wants to come visit us up here, she has to get them actual passports.
It sounds like from what some others have said it isn't as strict if you are a Canadian citizen, but I'd still play it safe and go with the passport! Just so much easier!