From what I've read, babies would move around in their sleep because they are still unable to control their reflexes and responses to stimuli (e.g., noise, temperature). These movements are harmless but you can try holding down the arm or leg to help stop those kicks and punches.
If you observe twitches while your baby is awake, or if he/she had spasms, may be good to highlight to the doctor to check for seizures.
In general, these kicks and punches would likely decrease as your baby grows.
For more information:
http://www.parents.com/baby/sleep/basics/baby-weird-sleep-habits/
Some babies do not take well to swaddling, so it kind of depends on whether your baby is alright with it.
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