Suzanne, are you familiar with the "knitted on cast on"? If not, follow the link and familiarize yourself with how that is done. The nubbles on the Cupcake Hat are time consuming but, once you understand it, quite simple. All you are really doing is casting on 4 stitches using the "knitted on cast on" and then immediately binding them off again. This is done in every other stitch in the round. So:
*(K1, CO 4, BO 4) repeat from * around.
CO = cast on
BO = bind off
If you, or anyone else, would like further clarification write to me using my email address, which is available on my profile page, and I'd be glad to help. That way I'll have your email address and will be able to respond to you directly.