Okay, I can't find the picture on the site; the best that I can tell it is a simple St st hat with a ruffled border. I have done a very easy ruffled border before by casting on 3 times the # of actual cast on sts. For example if your head requires a cast on of 90 sts, I cast on 270, then knit around 4 or 5 rounds of the 270, on the next round I do k3tog all the way around & this will give u a ruffly effect and u will be back to the correct # of sts for the hat. Although, knitting on twice the amt and following the above instructions, but using k2tog decrease round looks nice, too. There are many ways to make ruffle edges. This looks as though it may be crocheted, I can't really tell. I use a hat 'tutorial' to get custom hat sizes when I do some hats, this may be helpful for the sizing.
This is the custom fit basic hat formula. I might also suggest that if you follow the aforementioned ruffling technique that you use lightwt yarn (whether it be for just the ruffling or the entire hat), bc it could get heavy with bigger, heavier ( :doh: duh...) yarn.
And, this 'Knitty Gritty' episode has some ruffling techniques in it, too
Have fun...yell if this doesn't help!