Altering the genetic pre-disposition of another person, even if it is an embryo directly borders on the idea that one person has the right to change another person for the sake of their own vanity. If a parent wants blue eyed babies no matter what, then the parent is disturbing the natural processes of cell pairing of the child, all for the sake of nothing. It is also a form of "playing God" = that is what makes it morally problematic.
Ethically, the minor *even inside the womb* has no way to consent changes, so the parents might be literally ruining a child's life just because of cosmetic adulteration. To what point is parent intervention "too much" and nearly illegal? That is the ethical question to be asked.
As yet, there are no GM babies that I know of. I assume that you are talking about doing things like selecting hair color, eye color, and eventually maybe things like intelligence.
The main moral issue would be the idea that many people have that God did not intend people to be picking and choosing what they look like or how smart they are. It would be a classic case of "playing God."
Ethically, I think you would have to look at how much of an advantage rich people would have. If you have enough money, you get to order yourself a perfect child. Your kid will have huge advantages over the poorer people's kids.
The moral and ethical issues that come with this concept of genetically modified babies lie strongly along religious beliefs. If you believe in God, and that He is in charge of our lives, and with giving us our particular traits, physical bodies and personalities, then science stepping in and altering the genetics can be deemed "playing God." If you don't believe in God, then such issues are not as big of a concern. Also, if you do believe in God, but feel that He approves of science for the bettering of humanity, then those issues won't play as large of a role either.
Using the modifications to eradicate disease also might soften some of the protests against such modifications. If you know that your child would be born with MS, for example, then it is very compelling to be able to alter them in order to enhance their quality of living. Opponents to that philosophy would again cite the playing God argument, or, on a non-religious front, might indicate that our genetics--for good or bad--are a crucial part of our human experience here on earth. Take away our weaknesses, and we won't turn out to be the same people. Weaknesses often lead us to become more strong, to have individual characters, and to learn to triumph over adversity, giving us a sense of self-dignity and accomplishment. That is more of an ethical argument that might be used.
Those are just a few thoughts to get you started; good luck!
As thing stand today there are no genetically babies produced so far. But it is very much in the realm of scientifically possibilities.
One of the reasons that this branch of science has not progressed a fast as it could have are the controversies regarding ethical aspects of such making genetically modified babies. This has resulted in direct government action restricting such activities as well as in support in form of funding and people willing to take up projects in this area.
I believe the biggest ethical concern associated with producing genetically modified babies is the great degree of uncertainties regarding the unintended and unexpected creation of living beings that may be directly harmful to the humanity. Also it is quite possible that such development may result in great personal pain and miseries for the people given life in this way. There appear to be no great benefits of genetically modified babies to warrant such babies.
The next ethical problem of genetically modified babies is the possible misuse of such technology for breeding people of different kind of people just like we breed cattle and other living things in captivity. This will result in dehumanising the human beings. Also there is a value in diversity. Genetically modified babies will create a strong force or tendency acting against diversity in human nature and capabilities.
The standardization and regimentation that will be possible with creation genetically modified babies can lead to rather dismal situation of very rigid division of society in different classes, as envisage in some science fiction like 1984.
Genetically modified babies may also have unexpected negative repercussions on the family life and family value.
The power to produce genetically modified babies with specified traits is likely to reduce the human tolerance for people who do not conform to physical traits of our liking. This kind of intolerance for fellow human quite opposite to all ethical thinking.