The hooded baby towels were our standard gift for a while to friends who’d just had their first. You can spend from under £10 to £30+ for a really posh one, and they get used for quite a while. New parents always need plenty of muslins, again you can get nice ones pretty cheap or spend a bit more on posh ones. A swaddling blanket can be a nice idea too. If you’re close then hopefully you know if they already have lots of this stuff.
Clothes are always tricky because “newborn” covers quite a range of sizes and even if you get it right they’ll grow out of them very quickly. If you must, go for 3+ months.
Newborns do very little but feed and sleep and even once they become more alert they take a while to figure out how to move. They don’t really need much. Offering to take some home-cooked dinner round to your friends will probably be very much appreciated however!