It is natural for humans, being primates to want to hug to show our affection. This is not a canine "thing." Not until and unless they learn to tolerate it. To a dog, hugging makes them uncomfortable, threatened and it can appear as aggression from humans. Until a dog gets "use" to his people and becomes more tolerant, it is best to avoid covering the dog, looming over the dog. That said, as she grows and develops with you, she will probably learn more tolerance for that and will eventually come to associate good things with "human hugging."
For the time being, I'd avoid that since it is clearly making her uncomfortable. She warned you that she was feeling defensive or afraid and then she got punished for warning you. If you scold her ("NO!") for growling, you are essentially teaching her not to growl. So, if she is threatened or defensive, she will eventually skip the growl and go straight for the bite. Don't punish a growling dog.
What do you do with this 4 month old as far as obedience practice? She needs to earn most of what she likes and needs. You need to have her sit or down, shake hands (whatever she knows) before she gets a treat, dinner, out the door, toy, your attention. Don't be reacting to her every time she does something. In other words, if she looks to you for attention, don't always react. If she jumps on your lap uninvited, put her down. Ask her to sit first, then you be the one to inviter her up. Obedience practice, a little bit a couple times a day and one skill here and there throughout the day puts you in the "driver's seat." Use motivation and reward methods and don't put your dog on the defensive with traditional stern training methods. Make training fun so she'll look forward to working with you.
I would avoid leaving toys for her 24/7 and you choose the times when she can play. "Sit first." Teach her to give you the toy to your hand, by trading for a tasty treat. Make it a game. Then give the toy back. Teach her that it's fun to give you things. Make sure she gets use to humans taking things, but that she is not fearing losing her things. That includes her food. Drop an extra special tidbit of cheese or fresh meat into her bowl while she's eating. Hang around a little bit. Be sure she is trusing and comforatable with people around her food and toys....that she knows that YOU are the one who provides these things and that she has to EARN them. This is how you become a trusted leader, by controlling her resources.
Again, I must reiterate, that of course humans hug their dogs. I do and my dogs seem to like it all right. But at first, when the dog is so young, she may just see it as foreign and doesn't like it or feels somewhat fearful. They're all different. I had one like that, who was timid when I held him tightly. My Doberman, my most recent pup was not at all put off by that.. They all have different threhholds for "irritants." LOL.
She gets very growly during playtime when playing with her toys or having a tug of war with us. Is this just an extension of her finding out she has a voice??? Please help!!!!!
Growly during playtime is perfectly normal. It's play. This is different than grwowling when you hugged her. Or could it be that she was playing then? Are you sure she was objecting and not soliciting play while on your lap? What was her body doing? Sometimes it's really hard on the Internet. We can't see your pup and if you're not familiar with dogs and don't recognize body language, facial expressions, it is sometimes possible to misread what is going on with the dog. I just based what I wrote on my interpretation of what I read in your post.
You called it aggressive behavior and it is very possible at 4 months that it was play. Puppies bite, growl, squirm when they play and they can get rough.