Pattern: Bunny Beanie by Noe Knit It's a free pattern.
Yarn: Red Heart Soft Touch, by far my favourite baby yarn. It's soft, has great stitch definition, comes in tasteful colours and best of all, is machine washable.
Needles: Two sets of circular US six 8's. Knit on one until the third decrease round, then divided stitches between the two sets.
Modifications: There's always the "M" word when I knit. First, forget knitting the picot cast on for the brim, it rolls and doesn't show, so why go through the effort? I cast on 64 stitches for a newborn size. Finally, I tacked the two ears together at the bottom to get more of a stand up effect.
Thoughts: The ears make it a bit top heavy, but for a newborn it will work just fine. I'm adding this pattern to my list for baby gifts.