Hmm. That looks a lot like a kimono to me. I would assume that yes, the flaps are meant to serve as ears. And going with the kimono theme, it likely glides about on the bottom of its dress. I expect that the question of the legs that may be under her dress will be conveniently avoided.
EDIT: And on a kimono, the sash in that spot serves as both a decoration and a means of keeping the kimono closed. Ahem.