i realize this is a baby bonnet, and I don't know any babies, but this is just uber cute. Corinne's Thread: Baby Sunbonnet - The Purl Bee - Knitting Crochet Sewing Embroidery Crafts Patterns and Ideas!
Tutorial for easy DIY knot headbands. Cute, simple look. There's also a quick tutorial near the bottom of the post about making one of these out of a non-stretchy fabric, sewing part of headband to be more elastic-like.