Money is an appropriate gift. Your in-laws can deposit the money in a savings account for your niece.
If that isn't your choice, you may want to send a music box. I am Godmother to several of my nieces. For their baptisms, I gave them a music box- it doesn't have to play religious music, maybe lullabies would be nice.
Clothing may also be o.k.
I have also seen very nice quilts and blankets given as baptism gifts. I think Things Remembered may be able to embroider your niece's name and baptism date onto the blanket. It may be kind of pricey, but it's practical and unique.