1 - She'll probably like either.
2 - it depends on the yarn, go up a couple sizes from the hook or needle on the label gauge to make it soft and drapey.
3 - pick one that feels soft and cuddly to you.
4 - there's bazillions of patterns; you could do lace (in which case use an even larger hook or needle), or if you have variegate yarn a simple stitch shows off the yarn.
sue- knitting heretic