Sounds like the pattern is correct to me. If you are aiming for a 3" finished HST, you are officially supposed to cut the squares 7/8" larger but most people add an inch, so you would cut the squares at 4", draw a diagonal line, sew a scant 1/4" on either side of the line then cut on the line. The resultant HST should be just a sliver over 3.5". Trim down to 3.5"
Try one with some scrap fabric to verify.
http://www.psiquilt.com/2010/02/half...-tutorial.html