I used 3/4" wide elastic and made the casing longer than the elastic so that it would have a "bunched-up" look to it. I cut additional circles from the same fabric and used a hand-gathering stitch along the edge of the circle and pulled it tight into the middle. When you flatten it out, you get a nice gather and can add a charm or button in the center. I stitched the button on, but you could use hot glue or fabri-tac as well.
And here is the little princess! And yes, in her princess dress I made her for Christmas. The zipper ripped out when she first tried it on Christmas morning, but Aunt Joy fixed it with a new, much better zipper and rescued the dress back for the fair maiden! The fabric was from the rest of a donated bridesmaid's gown that my cousin gave me last year to fix up her dress. I had used the extra purple satin to alter this dress and pillow, and add accents to this dress last summer.