Ok, I don't mean to sound harsh here, but that was a while ago (relative to the little guys life so far). He was a "newborn" in FEBRUARY. It is now APRIL. So he isn't in the first 2 weeks of life still healing at the navel. It should be healed by now, and if it isn't, he needs to be seen by his pediatrician.
Outside of that, how she dresses him is up to HER and your son. If you want to have a good relationship with your DIL and be actively involved in your grandson's life, then you need to take 2 steps back and let those new parents figure out things on their own. They aren't imbeciles, are they? You can be there to help out WHEN ASKED, but otherwise, keep out of it. You really really don't need to tell them how to parent. They will figure it out. YOU did, right?
Unless you see something blatantly dangerous, then don't interfere or intrude. Offer advice only when ASKED for it. Otherwise, you will be seen as the meddling MIL who is annoying and trying to "take over" their baby. I know it is hard, but you will only damage your relationship with your DIL (the gatekeeper of your grandson for the next 18 years) if you don't learn to bite your tongue about insignificant matters. Please don't undermine her. She probably is a bit nervous to begin with, but telling her what she is doing wrong is not the way to go.
Here's how you help the comfort of your grandson: You let mom and dad work it out. It isn't up to you to decide "what to do then" when one is hot and one is cold, or a myriad of other parenting issues that will come up. That is for THEM to figure out. If they come to you for advice or ask your opinion, then fine, give your opinion or share "what I would do" about it. But don't find yourself in the position of telling them how to raise their child.
I know this all sounds really harsh, and I REALLY don't mean to be. But the level of concern I sense from your post just sounds to me like you run a real risk of being too much in the middle with your grandson. For YOUR sake, please don't be. Stay on the periphery a bit and let your son and DIL figure things out. They deserve to be able to do that, and it will make them better parents and give them a stronger marriage down the road. And isn't that your end goal?
After your SWH: No, if it bothered me, I would leave the room. It isn't dangerous.