I've used that same pattern and have now made...what? LOL 5 hats. 1 w/ the fold for my daughter the other 4 without. Neway I made the ribbing edge 2 in. They seemed to come out really well. I guess you could add 1/2 in. (to make it 2 1/2 in.) if you wanted too..but, 2 in. worked fine.
btw, I just finished this hat http://www.headhuggers.org/patterns/kpatt11.htm
...and it had a 2 in. ribbing pattern also..
Hope this helps!