Shirring is really simple. However, for this project, you will use your iron as much as your sewing machine, so make sure that when you start this project, you have both ready and on hand. Then it can be finished in next to no time.
First, measure your child from arm pit to where you want the shirt to go. For Cyan (long torso and size 8) she measures about 17 inches. Measuring from the bottom of the pillowcase, I add one inch to that length (for seam allowance and gathering factor) and cut the rest off the closed end of the pillow case. (Keep aside for straps.)
Then make a small hem at the cut edge to finish it off. Not too big, about 1/2 inch is great. Iron the edge with the pillow case seam (there is only one) at the back center.
Now, wind your bobbin with elastic thread. This thread can be found at any sewing and craft store. The top thread will remain the same, so you want to pick one that either matches or compliments your pillowcase really well.
Starting at the top where the hem is, stitch the hem with the elastic thread underneath all the way around following the hem. It will not look like it is doing much gathering at this point. This is very normal.
Now move your fabric over so that the hem is on the right edge of the presser foot. This is where you sew your next line of gathers. If you use your presser foot as a gage to where your stitches are supposed to go, you end up with very neat and strait gathers without having to measure every line.
Iron. This time you want as much steam as your iron can pump out. This will help your top gather nicely into the smocking.
To make the straps, just take the left over pillowcase, and cut it into 2 1/2 inch strips. Then fold in half and iron. Fold both edges to the middle where it was ironed and iron again. Fold in half and sew down the open side. Place the top on the child, and pin the straps in place at the right length. Take it off them and sew the straps to the top. (I use safety pins so when I take it back off Cyan it doesn't poke her.)
I chose to place the back straps close together for a more racer back look, but any placement will look cute!