For quite awhile it just felt best to sleep on my back with my arms resting straight by my sides.
When my elbows were very sensitive I would wrap a hand towel around them for padding.
I eventually trained myself to not bend my arms while sleeping or to put them overhead.
I can put arms overhead now but I never fall asleep with them like that - it's more for a relax/stretch thing.

I've read that some will pin their pajama sleeve to the bottoms? that might help

a few slings-
http://www.abledata.com/abledata.cfm...discontinued=0
http://images.google.com/images?hl=e...=1&sa=N&tab=wi

I would only use something like that occasionally - like going on long walks or to the store.