My sister-in-law is expecting her third child (first girl) in December, and I wanted to make her something simple that she could use in the winter months.  I'm really new to sewing, but here is the bunting I made from Simplicity 5720:


Question one:  I used the XS size in the pattern, which they list as being for newborns, but I've heard that Simplicity's baby patterns tend to be very over-sized.  The mama is quite petite, so I'm expecting that the baby will be on the smaller side.  Do you think this will be too big?

Question two:  The fabric is a polar fleece... should I finish the seams in any particular way?  Here's a picture:


Question three:  I did my first ever applique on the front... because the colour of the fabric is blue/teal, I wanted to "girl it up".  But I'm not used to adding embellishments, and I don't think the applique is enough.  Does anyone have suggestions on a good way to make this prettier?  I have some ruffled lace (white and teal), and some ric-rac, but I'm drawing a blank on where to attach it, and if I should attach either at all.  I could also do more applique... some hearts or something... ideas?