I have to agree with lulu here, even though I myself have been in a very similar situation...
You are very lucky to have a generous MIL who lets you stay at her house. She's about to become a grandma and while your learning to be a mother, she's learning to be a grandma too. You could have a horrible MIL who doesn't buy you anything, has no interest in the baby at all and doesnt let you stay at her house, and that would be much more terrible than a MIL who is throwing baby gear at you (and baby stuff is so expensive, take what you can get!).
My MIL always wanted a daughter and got two sons. When she discovered we were having a girl, she was ecstatic. She spoils her absolutely rotten (yeah it annoys me sometimes) but its to be expected. I just thought about my relationship with my own grandma growing up, and I adored her cos she treated me like a princess (and still does)!
As for decorating, I'm sure she would let you put the belly cast and canvas on the wall, and you can put some of the items she has bought on show too.
If its really upsetting you, you should see if its at all possible to move out. We moved out of the inlaws a month before my girl was born, and to be honest it was great having that independence.
Hmm, though it was nice having free rent, food cooked nearly every night, etc!