Years of research have demonstrated that human babies have very positive responses to touch and holding, both physiologically and emotionally. A baby is unable to understand that she is a separate entity from her mother or primary caregiver, but her awareness of separateness will come as she matures. This appears to be a survival mechanism designed to keep baby and mother, or primary caregiver, close together. Thus, it is important that babies be held very frequently as a baby benefits from a mother or father's warm touch, smell, and voice. It is very comforting for them to be held; therefore, they cry less.
We'd like to refer you to Ashley Montagu's book Touching, The Human Significance of the Skin, Mariana Caplan's book Untouched, and The Vital Touch by Sharon Heller. Our culture values independence so much that we begin distancing ourselves from our babies, consciously and unconsciously, from very early on, through the use of cribs, separate rooms, plastic infant carriers, bottle propping, and frequent separations.
We want parents to be conscious of this extremely important need for physical closeness by infants and older babies. Human touch and holding is really something we never grow out of. Adults have the same need for touch, unless they have grown up unaccustomed to affectionate human touch. Some adults will resist touch, especially if touch was only given to cause pain. Touch and holding is important from birth. It helps parents connect early with their baby, enabling parents to be sensitive to their baby's cues. Obviously, you can't hold a baby 24 hours a day; just be aware that it's very important to hold your baby when possible or have the father or other loving relatives hold your baby instead. Choose to rely less on baby gadgets, and opt to hold your baby in your arms or with a baby sling, wrap, or other carrier. As your baby grows, you will find she will be more independent, not less.