There is a great book that I read some time back, titled “Believer’s Baptism: The Sign of the New Covenant in Christ”. There is a chapter titled, “Baptism and the Relationship Between the Covenants” by Stephen Wellum, which is a response to some recent works such as Gregg Strawbridge’s, “The Case for Covenantal Infant Baptism”.
Wellum’s chapter summarizes well the whole idea of how baptism relates to the covenant and why covenantal paedo-baptists and credo-baptists disagree. You will want to read both Strawbridge and this book. They represent two of the better current books from both perspectives. Wellum’s chapter is available for free via pdf at this link: http://kingdomresources.files.wordpress.com/2007/08/wellum_baptindd.pdf