What Freud didn't know

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Ti-Coeur
In his fourth lecture on psycho-analysis (1910), Sigmund Freud elaborates on the possible significance of infantile sexuality for neuroses. He describes powerful wishful childhood impulses as sexual, the chief source of infantile sexual pleasure being the appropriate excitation of certain parts of the body that are especially susceptible to stimulus: apart from the genitals, these are the oral, anal and urethral orifices, and other sensory surfaces. Satisfaction, termed autoeroticism, is obtained from the subject's own body. Freud mentions thumb sucking (or sensual sucking) as a good example of autoerotic satisfaction from an erotogenic zone. According to Freud, sexual impulses are already present in the newborn child and continue to develop, until they are overtaken by a progressive process of suppression and diverted from sexual aims to cultural achievements, a process he termed sublimation (Three essays on the theory of sexuality, 1905). Freud's interest in the interpretation of dreams led him to propose that people were often subject in an early 'phallic' stage of development (typically between the ages of 3 and 5) to a so-called Oedipus Complex, where individuals were erotically attached to their parent of the opposite sex and were hostile to the parent of the same sex. As introduced by Freud, this complex appeared as an unavoidable step in the development of every subject, especially of male ones.
To our rational thinking, some (if not all) of these ideas appear strange (if not diseased), but Freud never claimed that these conceptions were rational. He came to these daring conclusions by exploiting some kind of 'secret record' of his patients, not by listening to their official anamnesis. In some hidden corner of our mind, we might feel like this, although we never would admit it. At Freud's time, not much was known about the sexual instincts of an infant. If he would live today, Freud would be delighted by how much we know in the meantime. In animals as in humans, sexual feelings are subject to strict developmental regulation. They can be turned on and off, like the channels of a TV set, depending on specific biological and social circumstances.
In prairie voles and in meadow voles, it has been shown that maternal behavior and paternal affiliation depended on the cerebral distribution of receptors for the peptide hormones oxytocin and vasopressin (Balaban 2004; Keverne & Curley 2004). It is well established that biological and behavioral sexual differentiation is governed by steroid hormones like estradiol and testosterone. Relevant quantities of these hormones are not produced before the advent of puberty. First subjective sexual feelings before puberty may correlate with the onset of dehydroepiandrosterone (DHEA) synthesis in the maturing adrenals at the age around 10 (McClintock & Herdt 1996). These endocrinological background informations should send speculations about the sexual feelings of a newborn into the realm of mystery.
Most research shows that children develop a significant sex role behaviour not at the age of 4 (as suggested by Freud), but some years later. Lawrence Kohlberg (1966) argued, along Piaget's stages of cognitive development, that until the child has fully grasped the constancy of gender, we shouldn't see very much sex-typed behavior. Children appear to be able to identify the external differences between a boy and a girl at 15-18 months, by 2 years they can place themselves as boy or girl. By 30-36 months they can correctly identify the sex of others on photos. The idea that you remain the same sex (constancy of gender) develops at about 4 years of age (Slaby & Frey 1975). Newly acquired gender knowledge is consolidated on a rigid either-or fashion, reaching its peak of rigidity between 5 and 7 years; later on, a phase of relative flexibility follows (Martin & Ruble 2004). This tendency of children, however, to form organized knowledge structures (schemas) not only pertains to gender, but  to all contents of their experience. Thus, the psycho-developmental grounds for gender-specific behavior (not to mention the hormonal grounds, see above) are not laid before the age of 4, and its expression, therefore, can only start thereafter.
What would Freud say, if he knew the literature as we know it today? Would he admit that he was wrong? Or would he excuse for just a slight rethoric exaggeration? And what about his patients? Did they lie - unconsciously? Maybe we should not throw the baby out with the bath water. There can be no doubt about the extreme importance of intimate and tender physical contact in early childhood for the development of a healthy mind (Chugani 2004; Nelson et al. 2007). It may not be justified, in the light of our scientific knowledge today, to equalize the pleasures of a baby contacted tenderly by his / her parent, with sexual pleasures as adults know them. In that respect, Freud used an analogy taken from our adult life. Persumably, he never meant that in the literal sense (although he all too often was taken literally). In his famous letter to Albert Einstein in 1932, he admitted that, while referring to the positive human instincts as erotic and sexual, he deliberately pushed too far the popular notion of sexuality ('mit bewußter Überdehnung des populären Begriffs von Sexualität').
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psychoanalysis
Balaban (2004) Why voles stick together. Nature 429, 711-712
HT Chugani (2004) Fine-tuning the baby brain. Cerebrum 6/3, 33-48.
EB Keverne & JP Curley (2004) Vasopressin, oxytocin and social behavior. Curr Op Neurobiol 14, 777-783
CL Martin & D Ruble (2004) Children's search for gender cues. Curr Direct Psycholog Sci 13, 67-70
MK McClintock & G Herdt (1996) Rethinking puberty: the development of sexual attraction. Curr Direct Psycholog Sci 5, 178-183
CA Nelson III, CH Zeanah, NA Fox, PJ Marshall, AT Smyke, D Guthrie (2007) Cognitive recovery in socially deprived young children: the Bucharest early intervention project. Science 318, 1937-40
RG Slaby & KS Frey (1975) Development of Gender Constancy and Selective Attention to Same-Sex Models. Child Development 46:849-856