My Annika just took her first plane ride to attend the Yorkie Fair 2007 and the first leg was 2 1/2 hours and a lay-over for about an hour and the second and final leg was 1 1/2 hours. Going to MI, I never had a problem taking her out of her crate and onto my lap . . . but on our return flight, (Detroit to Minniapolis) the flight attendant told me I need to put her back on her crate

so I guess it just all depends.
I could actually have easily covered her with a blanket as she does enjoy sleeping under the sheets but I didn't. I could not ask for a better travelling companion. Not once did she bark on the plane but she definitely got quite an audience for those that realized I had a yorkie as she is so darn cute . . . .
good luck