Darlene - when you sit on the ball with your knees bent, they should be at a 90 degree angle with your feet on the floor. Walk your feet out until you're lying back on the ball - the ball is supporting the small of your back. Your whole body should be in a straight line at that point - shoulders, hips and knees. Then you crunch. Here's a little video demonstration from Exrx.net (though his butt is sagging down more than I like):
Ball Crunch .
If your stomach is lower than your knees, it sounds like your ball is too small. Here's some info on ball sizing:
Determining the Appropriate Ball Size
Hope that helps!