Adding my personal $.02 here...
Our daughter was in the waterbed with us from the start.  We initially put her
on a large, very flat pillow which was on top of the bed.  Once she started
rolling over (and off the pillow) and we could see that she was perfectly able
to raise her head/body off the bed if she so desired, we dispensed with the
pillow.
We also put a large, rolled-up blanket in the crack (though I hesitate to
call it such) where the mattress meets the side of the bed.
We have the  old-fashioned kind of waterbed mattress, where it's just one big
bag of water - no baffles or individual channels, etc.   We also have the
heater OFF when we are in the bed, but that's another subject entirely (ELF
fields....)

Beth Hilleke              [log in to unmask]