Yeah, the oats are good, makes the water all milky, you can rub the muslin bag on the skin, it's nice, I tried it on my skin just to see. Aveeno is made from oats, and there is an oat bag thing you can buy in Lush.
We've never used shampoo on DD. Hair is supposed to be self cleaning (I'm told), so we just use water (and she doesn't have a lot of hair anyway

She did have cradle cap when she was younger but we just let it clear up on its own.
Oh we also put in a squirt of Burt's Bee's baby oil to the bath, makes it smell nice