At birth, babies clearly can see, though it's very difficult to know what exactly — after all, they can't tell you. It probably feels like your newborn is focusing on something from the breast to eye distance, but kind of looking past you rather than into your eyes. He's actually looking at the side of your face, between your eye and hairline — he sees black and white best, so this area of contrast is easiest to focus on.
In a couple of months, baby will look into your eyes more, and then you'll start to get a social smile as he sees and recognizes you. No matter what the studies say, if you think baby is looking across the room at you and smiling... he is!
At around four months, he’ll start to notice and stare at his body parts — it's really cool to watch as baby detects and marvels at his own hands.
By six months or so, he'll clearly recognize you from across the room, and should be able to track and follow your movements.
By nine months, he'll notice those teeny tiny minute details that you might not even see... and that you probably wish he couldn't, either! (Meaning, all those little things he picks up while crawling around the room.)
Visually, a baby's favorite toy will always be your own face. There are tons of nice mobiles and baby toys and books, but the best toy is always someone's face. Plus, it's cheap, and always available. Just make sure you're smiling—babies can pick up if your face is sad, and that can be distressing to them.
If instinct says baby isn't seeing or hearing you, definitely bring it up with your pediatrician. Very often mothers are the first ones to pick up on problems.