Pregnancy.

The research I've done on this seems to suggest three main things:
1) High blood sugars pre- and during pregnancy increase the risk of "fetal malformations", some of which lead to miscarriage, some to stillbirth, some of which can be carried to full term but the baby will be born with some kind of disability. So for example bits of the body just don't form properly (atresia), but how serious that is will vary greatly from one baby to the next - http://en.wikipedia.org/wiki/Atresia
2) Macrosomia, which just means 'big body' - the foetus grows very big in some diabetic women. This can lead to problems as the baby is born for both the mother and baby, including the baby not being able to breathe properly (respiratory distress syndrome).
3) neonatal hypoglycaemia. This is often added in to the 'risk' factors but it's something that the doctors can totally manage if they know what they are doing. Basically the baby gets used to sharing the mother's blood sugars while in the womb, and so when it comes out and is no longer connected via the placenta, the baby's pancreas produces too much insulin. The healthcare team just have to make sure they treat the baby's hypo so it doesn't go too low. After a bit the baby's body gets used to the new situation and it's fine.

It's important to remember that the extra risk is still pretty low. In one study for example it found that only 4.2% of Type 1 women had babies with "major" abnormalities. The lower you can get your HbA1c the more this risk reduces.
(the study I'm quoting is: SUHONEN, L., HIILESMAA, V. & TERAMO, K. 2000. Glycaemic control during early pregnancy and fetal malformations in women with type I diabetes mellitus. Diabetologia, 43, 79-82.)

I hope this helps a little. The pregnancy threads may be of practical use too.

I have been given a magazine from my diabetic Nurse which I think is a Diabetes UK magazine and it details the risks which also include Pre-eclampsia and a couple of other things not mentioned in the post above. You might be able to order it from the Diabetes UK Website?