Nikon d60.which lens for portraits?

The Nikon 50mm f/1.8G AF-S NIKKOR Lens or the Nikon 35mm f/1.8G AF-S DX Lens.
I want it for portraits of my girls and future babies. Which is better for infant pictures and portraits?

For closeup head portraits, 50mm is considered better than 35mm.
If you do not already have one, a good flash like the SB700 should be your next purchase. If you are expecting f1.8 to solve all your indoor motion, you may be disappointed. Bounce flash could be more effective, if you have a white or nearly white ceiling.

Well both will fully focus on your non AF motor D60, so that's great. 35mm may be better for group shots, while the 50mm will be better for portraits and not having to be so close to the subject to take pictures. Personally I would go with the 50mm f/1.8G.

Here's a Portrait Nikon Lens Guide - http://www.the-dslr-photographer.com/2011/11/buying-a-portrait-lens-nikon/

I will get the AF-S 40MM DX Micro instead of those. I can bring as close to take the baby's cute nails.

If I HAD to choose one of those two, then I'd choose the 50mm. People don't want you in their face the whole photoshoot. You can keep some distance with the 50mm.
But, take a look at the 40mm f/2.8 micro. It's about $70 more expensive, but it's a macro lens, so it's super sharp and good for details, and the f/2.8 is fast!
Goodluck. Those three lenses are all great really.

In my experience any good lens, regardless of size, will shoot any kind of portrait you want if you know how to operate the camera, lens and know something about light. Do you know those?
If not you're going to have to learn.

If you do then I would expect you to already know which lens you want / need.

Infant photos as well, any lens if you know how to use it.