No kids yet, but we are preparing for our first and my big advice would be to let all your friends with kids know you are expecting and that you aren't averse to hand-me-downs. We've been very generously gifted all sorts of stuff...no idea how much we will use (it sounds like babies are unpredictable in their likes/dislikes), but if things don't work out at least we haven't paid a mint for it and there is a thrift store just down the street if we can't find another set of parents to unload it on. Your parent friends may also be able to clue you into good sources for purchasing used items. We've found out about a couple of local swaps and consignment sales, which have been great for filling out the 0-6 month wardrobe, plus picking up some additions to my maternity wardrobe and some random baby/nursing accessories that have been on my "might be helpful but not sure I want to shell out full price on them" list. Hopefully they'll also be useful for a little while as baby gets bigger (eventually I think they get harder on clothes, making hand-me-downs more scarce...).
Also, in our area at least, Craigslist is proving to be a very good option for things that you are perhaps less likely to get used from friends. I got a nice stash of mostly new cloth diapers for about half their retail price, and an Ergo carrier for about a third of the retail price. We have also found a lot of (good!) stuff on the street (last week I picked up a set of diaper snappies and a very nice diaper wrap, still in their original packaging, for example), but that may be a phenomenon local to our town.
Also, I don't know what kind of childhood/babyhood you had, but I will say that our parents have both been somewhat useful as a reality check. We both feel we were pretty well cared for materially as children, so if our parents didn't have it, it is probably not ESSENTIAL, just nice/helpful. My mom has also suggested a few things that fall into the "they didn't exist then but gee they really would have helped with this problem/inconvenience" category, which is nice advice to have when trying to decide on "extras". Like, she did not have a nursing pillow but when she found out they exist now she really encouraged me to try one as she said she did have a lot of trouble figuring out comfortable positions to nurse in.