Peeling baby

My baby girl is 2 weeks old and when I brought her home from the hospital, they gave me a bunch of information about caring for baby at home. One of the things they mentioned was not using lotions and powders on newborns skin. Well, she started peeling. On her belly, face and feet. Is it safe to use lotion? I put a little baby Aveeno on her feet last night, to see if her skin was sensitive to it. (I had to stop using cheap diapers cause it was making her bottom raw.) Is it okay to slather her body in lotion? And, has anyone else's pediatrician told them not to use lavender scented products? (I love the smell of lavender!)