Ok, I faced this exact issue when we found out my daughter had a hearing loss at 18 months old. She was born hearing but has been losing it since she was 12 months old. When her loss was discovered is was "moderate", which means she was hard of hearing not deaf. She was fitted with hearing aids and they brought her hearing up to "normal".
We immediatly began to learn ASL. We believed that we would need to communicate and spoken language was not working for her at the time, so we began signing. She took to it instantly. She signed back "candy" within 30 seconds of us introducing it. She did great with ASL, spoken language was another story.
We continued to speak everything that we signed and we started Miss Kat (my daughter) in speech therapy. By the time she was 3 she had lost more hearing and was now "moderately-severe" and she was not gaining spoken language. She had a handful of words that she said with her signs, but she didn't understand when we spoke.
When it was time for preschool we visited a TC and a bi-bi (voice off ASL) program. We noticed that the TC school was terrible! The kids were not talking OR signing. The teacher stood in front of the class and spoke the word "shoe" and signed it at the same time. These kids were 4 and didn't know the sign for shoe?!?!? Not ok! The class was full of kids considered "oral failures" or "not yet ready for the oral class". It wasn't a real methodology, just a holding ground trying to get the kids to be oral. The kids were behind and needed to be fixed....not ok.
Then we visited the bi-bi school. It was amazing! The kids were all communicating and chatting and learning! They weren't behind, they weren't special ed., they were just Deaf. They were normal kids who happen to use a different language. We were hooked. We knew that was the right place for our girl.
Ahhh, seems simple, but now there is a complication! Just before her 5th birthday Miss Kat lost more hearing. She was now deaf. She has a severe-profound hearing loss. At the same time she became much more interested in spoken language. She would ask what the words for things were, she would hold toys up to her hearing aid and try to hear the sounds she used to hear and then ask us why they were broken. She started to do better in speech, inspite of actually hearing worse. My husband and I decided to look into a cochlear implant for her.
In November we gave Miss Kat a cochlear implant. She loves it! She is doing amazing! She is hearing at "normal" levels and her spoken language has exploded! She understands sentences (without lipreading) and loves us reading book (with our voices) to her. The problem is now school. Her school can't give us the spoken language time or proper speech therapy, so we are probably going to move her to the oral deaf program in the fall. We continue to use ASL all the time with her (barring speech times) and we will continue, hopefully, forever. Only her school placement will change, she will continue to be part of the Deaf community and we will continue to use ASL in our home.
Long story!
So, short cut, if I had another deaf child born tomorrow...(assuming she is profoundly deaf)....I would get her a cochlear implant at 12 months and use ASL from day 1.