When my Katrina was first born (although she was a big baby, 9lb 1oz at birth, although she got down to 7-15 before we left the hospital) the ONLY way i could carry her in either my ring sling or my pouch (new native style WAHM) was to carry her upright, tummy to tummy, with her feet tucked under her butt, knees out to the sides, and her head winding up right about between my breasts. I still [i]always] had to keep my hand on her at all times, though. Otherwise she'd slide sideways or slump backwards and I was afraid of her falling out. I didn't get really good at the various different cradle holds and sling positions until she was a little bigger, a little more capable of holding her head up, and I was a lot more used to the sling. The absolute best advice I can give you is to experiment with it. I did a LOT of wearing Katrina in her sling when I was sitting at the computer in my chair, with my knees up on a low foot stool to give my a little more stability. I'd adjust her and shift her around and try different things, and it helped tremendously. I was also trying to figure out nursing in a sling, which took some doing!! But I did eventually get it, and now (only about 2 months after I started slinging in something other than a snugli - which I loved for the first few weeks) I am very comfortable with both of my slings, in a variety of different positions. I still haven't gotten the hang of back-carries at ALL, haven't even hardly tried them because I'm afraid to do them without someone around to spot me, but I'll get them (eventually). I also have a very padded over-the-shoulder-baby-holder, which is a kind of ring sling, but I couldn't use that with Katrina at all because we both get to squished up and uncomfy with all that padding. I think it will be better when she can hip carry in a few months.
I like my puch best for carrying Katrina. Because it's more structured and simple and easy to deal with, I *know* right from the start that I don't have to mess with the sling to get the positioning right. This has saved tons of fussing with getting her in just right, because I know I only have to adjust the baby, not the sling. But that's an ease and simplicity issue, you CAN sling a newborn (even a little one) in most any sling.
Try not to worry too much if he looks squished, they are kind of supposed to be squished in there, it's part of the appeal of the sling recreating a womb-like environment. If you go to babywearer.com there are a LOT more mommies there who will be able to answer your questions more quickly than here on SK, our BW board is kind of slow. You can browse through the articles or register and look through the forums. You will probably find everything you need to know just reading, but you could also put up a post and ask questions, they are VERY good there.
I hope some of this helps! I have a picture of me slinging Katrina, but she was almost 2 months old by this point and about 12 pounds, so I don't know if it will help much. But like I said, the tummy-to-tummy carry was the ONLY one that worked for me for quite some time.