There is a lot of confusion, complicated by tabloid headlines, about what the term 'Designer babies' actually means. It is important to understand certain key terms:
IVF - In Vitro Fertilisation: where fertilisation happens outside the body. The man masturbates to produce sperm; the woman takes fertility drugs to produce several eggs, and a doctor harvests these, usually up to thirty eggs. They are mixed with the sperm in a petri dish, producing multiple embryos, each one genetically distinct. The embryos are grown, usually for 2-5 days, and the 'best' embryos (2 in the UK, as many as 5 in India) are chosen, based on number of cells, evenness of growth etc. and implanted. This has been happening since 1978. In 2011, success rates for IVF are about 1 in 3, although with multiple attempts, studies show that around two thirds of couples who try IVF eventually have a baby.
PGD - Pre-Implantation Genetic Diagnosis: screening IVF embryos to prevent inherited disorders. This procedure usually happens at about day 3, when the embryo is around 6-10 cells in size. Acid is used to get into the embryo, and an ultra-thin pipette sucks out one cell. The cell is screened, usually to identify whether the foetus might develop a genetic disorder (this is the only use for PGD in the UK). The first birth following PGD was in 1990, screening for Cystic Fibrosis. PGD can also be used to check if a new baby would be a donor match for an existing sick child (see Saviour Siblings)
PGS - Pre-Implantation Genetic Screening. In the US, embryos can be screened to identify gender, so that the parents can choose the sex of their child. This is usually called PGS, as there is no diagnosis involved (although in PGD there is technically no diagnosis either, as the embryo is not yet ill).
Designer Babies - This is not a technical term, and is often used to describe a baby born after any form of embryo screening. The term is similar to designer clothing, which implies a high degree of specification. As such, it is not an accurate term for PGD (where you merely choose not to implant an embryo that may develop a specific disorder such as Cystic Fibrosis) or gender selection. An excellent example of this is in the 1997 futuristic film Gattaca, where, in the 'not too distant future', all babies are born using PGD. Parents choose many features - hair, eye and skin colour - as well as eradicating 'potentially prejudicial' conditions such as myopia (short-sightedness), premature baldness, addictive susceptability, propensity for violence, alcoholism, obesity etc.
What this all means is that most IVF procedures involve the selection of the best embryo; occasionally this is done using genetic screening; screening currently looks to prevent a pregnancy leading to a child with an inherited disorder (UK) or to select gender (US); screening could also select key desirable features and prevent undesirable ones, although this is not currently legal.