I applied for my son at Consulate General of India -NY in person last friday, 08-Aug, and approved today 12-Aug.
They asked me the following documents:
1. 4 recent PP size photos
2. Current Valid Passport
3. Copy of the Passport
3. Birth Certificate
4. Copy of the Birth Certificate
5. Passport of the Parents (both father and mother)
6. Copies of Passpoert of the parents (First 5 and last 2 pages)
7. Birth Certificate of the Parents
8. Copy of the Birth Certificate of the Parents
9. $155 processing fee
10. $15 Postal fee, if the PIO card need to sent to you by post.
In the PIO card form take thumb impression of the baby (LEFT for boy, RIGHT for girl) in 4 places.
In the Evidence of Residence in India, i beleive 13 or 14 point in the form, enter baby's gradpa/grandma information. In my case they ensured this.
For further information go to "indiacg" website.
Hope this is of some help.
Good Luck.