I'm not math-y enough to even begin to go about proving this, but just based on logic I believe you can just cut the circle in half to give you a semicircle with a diameter of $1$ unit, which would have an area of $\tfrac{1}{8} \pi$ (a circle with a _diameter_ of $1$ has an area of ${\pi \cdot\tfrac{1}{2}}^2 = \tfrac{1}{4}\pi$).

This will fit the longest possible layout along the diameter, and I don't think it should be possible for the snake to lie in such a way as to break out of the semicircle.

If anyone can provide any kind of proof (or disproof), feel free to edit my post.


Here's an illustration of the blanket, provided by @MartinFrank. The red lines indicate possible snake positions.

![enter image description here][1]

  [1]: http://i.stack.imgur.com/ddTOe.png