Can porcelain dental caps, rather than silver, be put on baby teeth?

Yes. White crowns for primary teeth are available. There are different alternatives including cost effective ones like polycarbonate ones. However they are a little more difficult to place and may not last as long. Ask your dentist what they have available.
Costly investment. I have had parents foot the bill for the expense of a single porcelain tooth, a central incisor, for cosmetic reasons. The idea of putting that investment into kids who often need 8-12 caps on teeth that are shed is a bit much. The position in the gum line needs to be preserved to allow space for emerging permanent teeth or some would just toss the decayed teeth & be done.
Yes. A few companies have begun producing zirconium crowns. These are made from a strong white porcelain. They are more costly than the stainless steel crowns but not as expensive as custom porcelain. Ask your dentist if they use ez pedo or nu-smile crowns.