I second everyone here (except for the part about letting her nap in your arms - sorry grandmom!! LOL!)
Truly, it's best to use the formula that helps her stomach. My kids eventually took 6 ounces of milk every 3 hours. Things will change some when she starts eating food, but you're a long way from that.
I wouldn't hold her constantly, but do try to make her comfortable. A swing, a bouncy, singing and talking to her while you try to cook or clean, etc. Make sure that you don't ONLY pick her up or hold her when she's crying. You don't want her to think she has to cry to get picked up. Pick her up when she's content, too. Don't ALWAYS pick her up when she's crying. Sometimes, sit down beside her instead, love on her and talk to her, give her kisses. That helps her calm down without JUST the holding.
If she is restless and has difficulty when lying down, try laying her a different way and see if that helps. My first child did fine on his back. My second simply could not settle laying on his back or side. It just didn't work. I talked to the ped and she told me to try his stomach. Wow - he just slept the most contently that I had seen since bringing him home. She told me that some babies just needed to be on their tummies, and as long as I was careful, it would be okay. No toys in the crib, no pillows, have him in a sleeper and not use heavy blankets, and keep the room relatively cool at night. He's a senior in high school now and STILL sleeps on his stomach :)
Good luck!