Check out Bev's BLOG
Preemie size: cast on 69 sts (138 sts for newborn size of 36")
Knit 4 rows, then do pattern:
1st and 3rd rows are knitted
2nd row knit 1st and last st. Purl the rest
4th row: K1 (edge) p1, *k2, p1 repeat from * across and be sure to end with k1 edge st.
Repeat these 4 rows for 20" (32") and end with knit 4 rows. You can add a pretty edge around.
I call it 'Mouse Ears' because I can see a certain famous mouse's ears within the knitted pattern. :)
If you make one of these blankets perhaps for a little girls doll, or to sell at a craft show, please consider making one for hospital near you to keep a small baby warm as mama holds them.