We decided to go with cloth diapers. They are: (1) good for the environment, (2) soft on baby's skin, (3) have the potential to lead to earlier potty training, and (4), are actually probably more convenient for us -- we live 20 minutes from the nearest diaper-carrying store.
Cloth diapers seem like a lot of work, however, we are finding them reasonably easy. Having tried both kinds, I can say that disposables aren't much "better" than cloth. There is an extra step involved in putting the diaper on, and then of course the diaper has to be washed. But really, it's not too bad. After seeing how many disposable diapers we went through in the first two days, I am glad to be saving the money and the natural resources.
First, there is a "prefold" inner that we fold onto him in the shape of a diaper. The prefold gets secured with a "snappie" that holds it snug against his skin. Getting a good fit with the inner diaper seems to be the trick (and it also seems to be a learned skill).
Then, we velcro or snap on a waterproof outer:
When we change the diaper, the inner gets rinsed and placed in a laundry bucket. The outer is used several times before we wash it.