Our kids are 3 years old and 5 months old and we just opened two 529 accounts.
Our state allows an income tax deduction up to $2k (not much but we will take it). Hence, we put $1k in each account to open them. We are wrestling with how to handle these accounts going forward, but I think we have figured it out (at least for now).
The trick with 529s is that you do not want to overfund them because you get whacked if you don't spend them on higher ed. The other trick is that you don't get much bang for your buck unless you contribute early to maximize the tax free gains. In other words, it doesn't make so much sense to open a 529 when your kid is 16, because you are not going to save much on the earnings, and it makes more sense to just put it in an ordinary taxable account or savings account to avoid the restrictions.
A concern is that the rate of inflation for higher ed going forward is going to scale back drastically. I also believe online learning and incentives to provide free or lower cost higher ed will reduce the cost in the future. This appears to be the "writing on the wall" and we are taking it into consideration for funding the 529 accounts. Also, I attended an in state public university, which in my opinion provides an equal if not better education than a fancy private school. There is something to be said for not "pampering" your child, and in my experience I see a lot of graduates from those pricey institutions not really applying themselves, because they never really had to take initiative. That, and it makes no sense not to take advantage of the reduced cost of in state public universities.
Vanguard has a very handy college saving calculator. We more or less plugged in the cost of attending an in state public school, assumed a high ROI of 9%, a low college inflation rate of 1%, and assumed we will go forward with $1k contributions per year (each) to maximize the tax deduction. After making these "rosy" assumptions, we more or less determined that $10k (each) invested now coupled with annual $1k contributions hereafter should fund public university by the time our kids are college bound. By doing it this way, we minimize the risk of overfunding, put something in there to grow and pay for their school, and maximize the state income tax deduction. We can always fund college through income or a taxable account if there isn't enough there in the kiddy. We are hesitant to put any more in the account because, again, we do not want to over fund them. If they do get scholarships, etc., then we can always keep the money there for grandkids, etc.
Granted, we are making these contributions only after we have fully funded our 401k and Roth IRAs, and have stashed sufficient funds away to pay for other expenses and emergency fund. In other words, if we had more pressing need for the money, we would not be talking about funding the 529 accounts at this time. These are a place for us to put our bonus money and to avoid paying taxing on earnings for what will likely be something we will end up paying for anyway.
We also got a credit card that puts 2% of our purchases into the accounts. This is not much (we just buy gas and groceries more or less), but it doesn't hurt.
We did some reading on how the assets in 529s get treated by financial aid. We read the book "Going to College Without Going Broke" and various internet resources/blogs. They are considered assets of the parent, which are counted around 5% for the "expected family contribution." This is the reason why some people I know do not have 529 plans for their children, thinking that they are going to miss out on "financial aid." These same people, keep in mind, drive massive SUVs, take lots of vacations, and complain about how they have no money. This to me does not sound like a very good reason not to contribute to a 529. First, as far as our situation goes, we are going to have the assets anyway and they will be counted somewhere else if not in the 529. Second, most "financial aid" we have been reading is in the form of loans. The entire point of saving for college is so that my kids will not have to incur significant debt. Avoiding the tax free earnings of the 529 just so my kid will qualify for a loan that he/she should not be undertaking is not a good decision.