Mary undergoes knee surgery, while Matt learns that Michael Towner was the hit-and-run driver; Wilson reveals the truth about Billy to Eric.

Against Eric's advice, Matt takes a job caring for a dying boy named Steve. Annie goes into the muffin-making business after being convinced by her daughters Mary and Lucy. Annie goes into business with a cookie shop owner, David Friel who's looking to expand his profits, although it's much harder work for Annie than what she had originally anticipated. Also, Ruthie teaches Simon a tough lesson about the art of being a salesperson when being his competition in selling greeting cards.

Eric's no-nonsense father, John ""The Colonel"" (guest star Peter Graves) returns when he learns an array of problems in the Camden household. Mary is jealous of a new member of the basketball team who is getting a lot of the attention. Lucy's declining grades are due to her hanging around with a bad crowd, while Ruthie needs to copy Simon in his quest to be a magician. Meanwhile, Eric is oblivious to all of the family troubles around him as he's preoccupied with writing a sermon that is to be covered by a camera crew. Meanwhile, Annie is doing all the chores at home and at church alone while everyone else is doing their own thing.

Eric tries to unravel the mystery surrounding a young homeless girl, Sarah James, that Simon brings home who's lost. Eric tries to help her and her alcoholic father, Joe James. Matt delights the prospect of going away to college. Matt says he needs personal space when having a older woman sleep-over. Also, sharing a room begins to fuel differences between Mary and Lucy.

During a difficult labor, Annie asks Dr. Hastings for help. Lucy decides to break up with Jordan because she doesn't feel the same love for him as he feels for her. Simon continues to pray for twin boys. Happy is alone in the house causing some mess and trouble. Simon suddenly decides that he would ask his parent's if he could get his ear pierced. Matt is reluctant and scared about giving blood and also tries to calm everybody's tensions with the arrival of the babies. Lastly, Ruthie is the same as usual in this heart-warming episode; bad-mouthing the twins until they come.

With Annie and Lucy adding a new bathroom, and the need for a new car, Eric is depending on his built-in annual raise from the church board. However, when the church deacons gets the wrong impression about the Camden's financial situation, they reject his annual raise. It's up to Ruthie to save the day when she realizes what is going on and to convince them to change their minds about their plan. Meanwhile, a young hospital patient (Josh Evans, ""Passions"") offers Matt some career advice. Also, Simon attempts to entertain a classmate who has a crush on him.

Eric and Annie put on their counseling hats when a very pregnant Julie appears on their doorstep prepared to leave her new husband Hank. Eric decides to take Hank out to dinner to discuss their issues. While they are at dinner, a very pregnant Julie goes into early labor. Unable to transport her to the hospital because Simon and Mary are out to dinner and Lucy is on a date, Annie does her best to calm Julie down. Hank and Eric return to the house just in time for the birth. Julie delivers a baby girl. Grateful for Eric's effort, Julie names the baby after him: Erica. Meanwhile, Lucy is disappointed when her date expects her to be 'the man', and Simon attracts the attention of an older female admirer.

Matt begins to go crazy over a psychological evaluation that he is required to take for his medical-school application. Matt also notices the strange demeanor of his psychologist, which leads to a surprising twist. Meanwhile, after Ruthie gets into trouble at school for missing homeroom classes daily, she tricks Robbie into coming to talk to her principal. Simon decides he no longer wants to be together with Sasha since they have nothing in common and that she is not that intelligent, but the plan backfires on Simon. Also, Mike wants to try to be in a relationship with Lucy again, but unfortunately she turns him down since they are both on the rebound from Jeremy and Elaine. Lastly, Eric must convince a terminally ill patient to embrace life no matter what the doctors tell him.