its not much of a problem to knit this. But how old will the baby be when you put it on? you user names tells me: VERY young
so do you really want folds around the head of your new born? the babies head will rest on the hat all the time (back or side mostly) and I would not think that that is comfortable… just a note.
I made this more than simple and fabulous baby hat that is a little cap that is knit in a kind of “T-Shape” and sewn together -
you cast on as many stitches as is takes to lay from the bottom part of the cheek over the head and down to the same spot on the other side. With a middle weight yarn that is about 80 stitches. then you knit this for about 4 inches, maybe a bit more (about 40 of how wide it is). then you bind off a third of the stitches on either side and knit on with the middle stitches only.
when the middle part has sides that are as long as the bind off egdes on either side: bind off all remaining stitches.
fold the sides down on either side and sew the side of the extended piece to the bound off edges of the main piece: it has now formed a cap.
attach a string of some sort to close it with. A monk cord, I-cord, braided strands, a crochet chain, ribbon you buy… and so on. Or knit little flaps with a button / snapper / velcro …
if you look into my photo album [ http://hyperactive.jalbum.net/hyperactive-knitting/ ]that hat is in there 3 times in different design: in light green, in pink (with lace pattern and a rolling edge) and in dark blue with a structure pattern.
since the pattern is SO basic you can be as simple or creative as you want to be… do all stochinette (careful: you should start with ribbing or garder to stopp the rolling), all garder stitch (our apprentice at the office did this as her first ever knitting project and it came out great), any pattern you find… structure, cable, lace, stripes, … all yarns work that you want to use… you can adjust size by making it bigger or smaller to fit the child in question
And you tie it on so it will not get lost or be pulled off.