The reasons are vast to make your own soap, cosmetics and even cleaning products. Although there are a lot more options out there it seems to me that reading the labels and knowing what to look for (just like with food) is a good place to start. Herbal Essences, a brand I used a lot as a teenager is taking steps to cut down on 1,4 dioxane... which according to most sites is a carconigenic chemical and is bad, bad, bad. " Herbal Essences contains so much dioxane, in fact, that it should carry a warning label required for cancer-causing chemicals under California's Proposition 65." (via fast company).
Don't just trust a shampoo if it says "herbal", or "cruelty free" read this buying guide from National Geographic's, Green Guide for more answers. Beware of 1,4 dioxane, diethanolamine (DEA), formaldehyde, fragrance and parabens and check all your cosmetics for the Green Guide's Dirty Dozen.
You can get a triple pack of Burt's Bees Shampoo on Overstock for $22.99 which isn't bad and passes!
You know it's really questionable whether the amounts of these chemicals can really effect you or not. I think it is a viable assumption that using any with regards to a little child's body is probably not a good idea. And really if you have to question it do you really want to?