That two and a quarter inches was just what I needed, though. Now all my stuff fits!
Regarding the fabric requirement, my goal was to use only a half-yard of each fabric. As long as you're willing to add two more seams, up the sides of the bag, you can easily get away with just a half-yard. Good news if you want to use a more expensive fabric! I honestly don't think it detracts from the bag, either.
Oh, that reminds me, I made one more change: I fashioned a little fabric loop for keeping the bag closed. Now I just have to decide on a button.