I think I know why the very middle is 'puffy'. You need a couple more rounds of plain knit between the increase rounds 3 and 5. I've been playing around with Pi shawls lately, and the formula is you CO, knit, double the sts, knit one rnd, double the sts, knit 3 rounds, double the ste, knit 5 rounds, double the sts, etc.... This pattern doesn't really double the sts from rnd 3 on rnd 5, but it's close enough. I got up to rnd 20 doing your pattern as written, and it does have a ruffle to it. So I'm going to try adding 2 more plain rounds between those increases from 36 to 54 sts and see what that looks like. I think it'll lie flat then.