[Liveleak] Here's another report about deformed babies in Fallujah, but the article blames white phosphorus. I really don't think that is what is causing the malformations and cancers. Recent geological surveys have found slightly enriched uranium in hair samples of hundreds of people in the city, along with uranium in the water and soil. The film Fallujah, A Lost Generation? is a great resource explaining the tragic events.
There is a fairly difficult video to watch here on Live Leak: