Congrats on the new business. My photographer offers one hour sessions for $75 for one person and $95 for more than one (any number). She gives us 30 proofs, a cd with all the photos taken during the shoot in color, b/w, and sepia, and a letter saying she has not copyrighted our images and that we can print them at will. I have referred so many people to her because she is good and her prices are unbeatable! The Walmart staff know her work now with so many people using them to print photos.
As far as advertising, Craigslist is great, but don't do anything for free. You will be wasting your time. My SIL just started a new cake business and she also learned the hard way. If you undersell yourself, so will others. If they think you don't think your work is worth anything neither will they. Find out what other photographers are charging in your area and underbid just a little bit...NOT a lot or free.
Offer a referral program (say 10% off the next sitting when someone refers someone else. Offer a baby package (newborn, 3 mos., 6 mos., 9 mos. 1 yr). Maybe if they get 3 sessions done, they get the 4th for 50% off.
Join your Chamber of Commerce and go to the weekly and monthly events.
Think about where your clientele will be and ask to put your cards in those businesses....don't forget scrapbook stores!
Good luck!