Hi Barb, that is a tiny little one. How tall is the baby? I am sure he or she will grow fast. I would opt for atleast one 30" sq. By the time you wrap it around the baby and tuck it in here and there. Otherwise it will be outgrown within a month or so..they can keep it later on to use as a dolly blanket (if the baby is a girl).
Happy Stitchin' Linda B.