Might I recommend:
This brand has been around a little longer than the others. In high school, I used to pine for the beautiful, jewel-hued velvet hippie clothes that the original designer, Moni Sumner, used to make and I could never afford on my fast-food wages. Now her daughter (Jessie Reynolds, pictured above) has taken over, and just look what she's done! Amazing creations, all handmade in organic cotton. These are sewn and batiked in Sonoma, California by the artist herself (well, there's a few American Apparel blanks, but they are at least made in the USA). She's got tons of amazing, stylish designs that are very wearable. Don't worry, they even go in the washer & dryer just fine. :-) Waxing Moon Batiks makes gorgeous things for women and children. Pick up a batik velour tank dress for your little girl - every one comes with a tiny, matching purse, and she is guaranteed to love this dress that doubles as a jumper when the weather is cool! Waxing Moon Batiks is also available on Etsy at http://www.etsy.com/shop/waxingmoonbatiks.
Don't know about Etsy? You should really check it out! Etsy.com is the largest online marketplace of handmade goods and supplies to handmake your own goods. This isn't Ebay. These are serious artists that present beautiful thing beautifully. :-) Support art and craft by buying it and surrounding yourself with it; your life will be richer.