Today I finished the hat on my new Knifty Knitter purple round loom.  This loom has a 5/8" gauge.  This is the same gauge as the small Knifty Knitter blue round loom.  I used one strand of a worsted weight yarn and the "U" knit stitch which is a looser version of the flat knit stitch.  On this adult hat size loom, this produced a toddler size hat.  I also shaped the top of the hat so that it is not so bulky when you gather it.  I used the directions I found here for shaping the top.  Finally I have my baby hat completed in the correct size.