Get yourself some corsage pins. .. they sell them at Walmart and other craft departments... pin the arms in the place that you want them to be at. then take a yarn needle and a length of the same color yarn and whipstitch it in. Don't knot it off until you get both arms on - you will kick yourself if they aren't on where you want them to be.
There is a japanese site that really shows a great picture tutorial on sewing doll appendages on. Let me see if I can locate it - it is the site that has the praying/sleeping cat that is going around right now here - someone just made the cat. Good looking cat. I am glad that the pattern is for free on her site.
You won't need to read japanese to understand this site. It is done really really well.
Okay.. I will need to edit this for you and add that link. The computer I am on doesn't have the bookmark for it...
Okay. here it is..http://www5a.biglobe.ne.jp/~mite/index.html
I do feel for the person who designed it. Someone here linked to a site that has it translated in English and the designer put up a plea to not post her designs that it wasn't honorable to post them. Being a designer myself I feel for her.
Anyhoo. The pattern for the cat is on her site - if you can navigate it, you will find the tutorial on how to attach arms. She is a brilliant designer and her site has some wonderful examples on what to do and not to do when making animals/dolls. I am a pretty seasoned animal/doll maker and designer and I still picked up a few tricks from her site.
Best of luck on your creation!