If you drop one villager on another and they "kiss" they will then start to walk towards the love shack together. A baby will be born when they come out again. However, if you watch the count of villagers on the screen it will go up if she is going to have a baby. If nothing happens you can try dropping the villager again and again until a baby (or babies) is registered. If you then move the woman a baby will "magically" appear in her arms. It seems a little mean, though, denying them their time in the love shack together.