I found some cute fabric at Walmart that is already shirred and ready to sew up on one side to make a sundress for my granddaughters. Great deal on sale for $2 a yard. My question to you and how to measure it...do I just measure around the bust and cut that much and sew up the side?

If it is what I am thinking of - I used to make these sundresses for my daughter years ago. I think that if possible it would be better to measure the elasticised (shirred) side on her (if you can) otherwise it will be too loose. Depending on how much stretch there is in it, you may be able to cut the shirred side about 2 to 4 inches smaller than her chest measurement so that if fites snugly around her.