salvation army or good will store stuff is usually cheap and clean because infants grow so fast they do not have time to wear it out. Yard sales and flea markets too. tell you sister most insurances not give out free car seats. Also any of these places you can find baby essentials cheap too like changing table, crib high chair, swing, jolly jumper, baby backpack, and all she would need to buy at say walmart would be a crib mattress. they grow too fast too buy expensive and these places you will often find quality clothes from baby gap, old navy, carter, Oshkosh etc.
I agree with Diana. Resist the urge to buy baby clothes before knowing the sex. Spend your time and money getting other essentials. I bought clothes before I knew the sex and it was a waste because when you know the sex you can pick out waaaay cuter stuff. The choices are way more limited for neutral things.
That being said, buy clothes up to a year. The first year is full of the most expenses so better to be prepared. Plus, you can get great deals by buying this season for the same season next year. You'll get a lot of newborn stuff so wait until after the shower to fill in your gaps. How much you need depends on your personality. Just buy about 5 of each basic in each size (sleepers, onesies, cotton pants, etc) then add as you see you need more. Buy tons of bibs! I have about 40 and sometimes have to wash more than once a week. I'd go to Babies R Us website; they have a registry list that should be helpful.