Dee at Peeper Hollow Farm wrote a great blog post about making baby sheep coats from sweat shirt sleeves. I got a bunch of cheap sweat shirts at the Goodwill but was left with the bodies. Recently I stumbled across a woman online making hats from sweater bodies. Well, that should work with sweat shirt bodies too!
First you need to measure your head circumference. Subtract 3-4 inches (so the hat doesn't flop around on your head), adding back an inch for seam allowances and cut your piece to that measurement. For example: my head circumference is 22 inches: 22-4+1=19 inches.
Next, fold the piece into thirds or fourths (depending on how many seams you want on the top of your hat.) The first hat I did fourths but I like thirds better.