If you're ever at Babies R Us roaming the aisles, you will come across a whole section of humidifiers. I never thought of purchasing one until my daughter came down with her first case of the sniffles and my pediatrician told me to invest in a humidifier. I bought a warm-mist humidifier and wow, did it make a difference. I don't know if I can credit it with curing my daughter overnight, but she was back to her old self the next day. A bonus for us is that it keeps her room a couple degrees warmer, which in the winter, is very comforting.
You can buy either warm- or cool-mist humidifiers. The warm-mist humidifiers are great because the heat from the machine will sterilize the water and mist. Just be careful not to put it in a place where the baby can tip it over or reach it since the steam or hot water could burn them. If you buy the cool mist, make sure you clean it often as instructed because you don't want bacteria and mold to infest the humidifier.
The bonus, we found, was that the machine makes a little white noise, too. Healthy and happy restful nights.