There are was a discussion about that on a german board a little back and some of the tipps made it to this webpage:
http://www.nadyas-naehtipps.de/indexe.htm
I have to say, I once tried and found the folding method a bit tricky.
And BTW, what was never mentioned in that discussion: the costumes from Bella are with an unstretchy material underneath so the cutouts won't lose their shape. Saw both methods on them, folding round the edges and just sew with zig-zag around them, I guess it depends a bit on the material and the seamstress who did it.