If your baby is ready to start writing, then yes the sandpaper letters are a very good idea maashaa'Allaah.
When I flash the letters at my daughter, I always say the last harakah, e.g. كتاب kitaabun.
The reason being that most people who learn
without the last harakah, they dont know it when you ask them. Whereas if I teach her the words with the last harakah, then inshaa'Allaah as she grows and speaks/ hears the word without the last harakah then inshaa'Allaah she will know what it is even if it is not pronounced.
Inshaa'Allaah once you have completed the alphabet, then you can move onto the tashkeel. There are many books that you can use to help you, such as Qaa'idatun-nooraaniyyah. I will be using this one inshaa'Allaah:
http://www.learningroots.com/lr/lvq002.phpI use this book as a guide to create my flashcards.
Take care and all the best in your teaching. x