Thanks everyone for taking the time to answer my questions. I think the best option is for me to call and talk to someone at the NICU, since all of the information I've found varies.
I was thinking something like 24" by 24" would be good, and I have an idea for a rainbow trip around the world that I think would be cute and not take too much time to make. Small, but afterwards it could be a burp cloth or wallhanging, whatever. I just want it to be used.