You said the squares all came out smaller than 1". Were they all pretty much the same size? If so, I would call it good. It's a doll quilt. If it's a gift the recipient will love it (and won't measure it). If you are making a quilt where all the blocks are the same, then a consistent seam will work, but your quilt might be bigger or smaller than the published size.
It sounds like your seam allowance is not really 1/4". If you have a quarter inch foot, you can't rely on it. Thread and fabric differ. You need to figure out where the quarter inch seam is on your machine, with the fabric and thread you are using for this project, and just mark it on your machine with tape or whatever works. Here's a way to check:
http://www.quiltingboard.com/tutoria...ce-t89997.html