A lot of preemie charities are making the isolette covers. The one I have sewn for wants just two sides of 100% cotton flannel (can be pieced or not) and no batting. They are simply "birthed" and quilted, topstitched 1/4- 1/2" around the outside edge. The size they want is 34" x 40", which is just about right for one yard for each side, after prewashing and shrinking.
The babies need their isolettes covered so their little eyes can be shaded from all the light in the NICU while they are growing. Then once they are able to go home, their blankies are given to them to keep as a lightweight baby blanket. They are pretty good sized!