A.,
My daughter has one too. Her's happened at about two weeks old, and grew huge, covering her left nostril completely. I was sooo worried about it. I thought that everyone was going to tease her for her whole life. Now that she is 7 years old, you can bearly tell that it was their. Still a tiny bit puffy, but nothing like the huge cherry shape that was there as an infant.
The doctor called it a hermangioma. He said that it was similar to a hemroid...blood vessels forming in one place. I was soooo worried about it that I even asked the dumbest question on the planet to him.
I said "Well, if it is like a hemroid, can I get some preperation H for it?" He laughed.
But he did tell me that steroids can reduce the size a tiny bit, or plastic surgery is an option, but he said give it till she turns 5, before we do anything at all first.