By frilly edge, do you mean a ruffle?? I googled "knitted ruffle" and came up with a number of patterns that add a ruffle to a neckline or cuff. This was one of them on Knitty which is fairly simple and self-explanatory. You pick up stitches, knit one round; increase all the stitches the second round, knit the third round. You'd keep going for as wide as you want the ruffle. I did a similar thing for a baby cap and it worked great.
Pick up 81[ 83, 89 91, 97] sts with 16-inch circular needle at cuff end of sleeve.
Join, being careful not to twist stitches.
Round 1: K
Round 2: K into the front and back of every stitch, doubling the number of sts on the needle.
Round 3: K
Round 4: K into the front and back of every stitch, doubling the number of sts on the needle.
Round 5: BO
Repeat for other sleeve.[/color]
Obviously, you would adjust for the number of stitches you have on your item.