For small babies, I would advise looking either into jersey knit type slings (I think one brand is Tricot Slen) or in the Storchenwiege slings: they make to order special narrower slings for premature babies.
The jersey knit slings should be slimmer and would allow a snug fit without cutting baby's circulation.
Note: Even though my instincts tell me that there is nothing wrong and it can even be positive especially for a premature baby to use a sling, I have never even been close to a premature baby, so I would have no idea if it is safe/advisable.
I've been using a sling (regular storchenwiege) on my full term (4,7kg!) newborn baby. I place her high up on my chest, to the side: it's almost like she's sitting on my breast. Her head is up almost touching my chin (but she's on the side).
I make sure her legs are not waggling down but that her knees are level with her tummy (that curves her back, it's recommended).
Then I place the middle of the sling on her back and tuck it under her tush.
I bring the two ends of the sling over each shoulder and adjust it so it's not loose anywhere (I have to pull more on the top of the width than on the bottom).
It's the start of a "kangaroo" or "back pack" (but in front) knot, but I cross the sling in my back and then I bring each end back over her making sure that each end comes snuggly around her tush and back. (The end is like a double cross knot).
Then I tie it off on my back.
It's less secure for heavier children, but it has the advantage of not digging into the legs.
The normal version would be : after crossing the sling in my back, take one side and pass it over the first leg and under the second leg, same for the other side and tie off in back.
I used a sling for two babies already, so I kind of have the hang of it; that's why I've been "inventing" new knots. If you are not sure of what you are doing: check out youtube to see people tying lots of different knots.