Oh my goodness, it is SO cute!
This particular picture of it on the toddler looks a bit odd, but it was hard to snap a picture while she was lunging for the camera! As it turns out, the ruffle was easy. Just run a line of single-crochet around the line where the brown meets the cream then do a round of two triple crochets into each single one. Check out the Free Crochet Central for this ruffle edge and so much more.
I have now started a shrug for the Ungrateful Toddler. Pictures of that as soon as some real progress is made.