Baby K'tan: Please Help! (Pics Included)
From what I can tell from the pics, the size actually looks good on you. Keep in mind two things... that stuffed animal doesn't weight anywhere near what a baby will and that your pregnant belly is kind of acting like a "shelf", keeping the carrier from sitting better on you. When you have an actual 8ish pound newborn in there, their weight will stretch out the fabric more and they will sit lower on your torso. Ideally, you want the lowest part of the carrier (when the baby is in it) to hit around your natural waist (or belly button when not pregnant). Any lower than that and you will probably get back strain. Another good test for the position of the baby in the carrier is that you should be able to bend down your head and kiss the top of their head.
Hope that helps... Personally I am not a big fan of the K'tan because it's hard to get the sizing right. If it's too small, it's tough to get the baby in and feels too restrictive; if it's too big it will feel unstable with the baby in it and cause back strain. I definitely prefer regular stretchy wraps (I like the fabric of the Boba Wrap, used to be Sleepy Wrap, more than the Moby but they are very similar and both good wraps) but I know they are not right for everyone. Definitely better for getting a custom fit though!
I had trouble with the k'tan fit too although mine was way too big. I would try to find something that you can return if necessary after the baby is born because it is so hard to guess before you have the baby. That being said, a carrier that you don't like at all at one stage of your baby's development might work really well a few months later.