Circular needles are used to make seamless projects. When you have too few stitches to go around the circ you use double pointed needles. Most people who make hats start with a circ and move to DPNs after decreasing to the point that the stitches no longer fit.
Baby hats most often need to be done only on DPNs because they are so small. To make a nice rounded top you decrease till you only have about 8 stitches on the needles.
Knitting Pattern Central has tons of patterns for hats.
If you use straight needles you would need to seam a hat. If you want to make a hat on straights here's a few patterns listed in this thread.