:hug:snephenie, I'm so sorry to hear about your friend and losing her little baby. I can't even imagine what she's going through...losing her baby, and at the same time, recovering from a serious surgery. It's just incredibly sad.
Jints mentioned Bev's Country Cottage site--they have a lot of stuff there, and one of the things they have there are preemie burial garments--[COLOR=blue]here[/COLOR] is the link if you wanted to take a look; [COLOR=blue]here[/COLOR] is one that's designed like an angel and lists sizes on the bottom of the page.
I found [COLOR=blue]this[/COLOR] little knitted angel doll, and believe it or not, it was designed specifically for the same purpose that you'd be making it! [COLOR=blue]here[/COLOR] is a knitted dishcloth angel that is cute in the shape of an angel, and [COLOR=blue]here[/COLOR] is one that might look cute as many blocks seamed together as a blanket.
If you know how to crochet, [COLOR=blue][B]here[/B][/COLOR] is a whole page of angel-themed crochet patterns (for whatever reason, I always find crochet angel stuff, but rarely see anything in the knitted world with angels).
No matter what you make for your friend, she will cherish both the item, as well as your thoughtfulness and reaching out to her. Just go with whatever is in your heart with regards to what to make her, and I believe that she'll appreciate it more than words can express.