I feel uncomfortable around a friend who confessed their feelings to me
What did you say to your friend?
I said that I need time to think about it
There is nothing wrong with taking your time on a decision like that. Your answer can alter the friendship.
I already decided. I don't want to hurt her so I will tell her it's fine but we will just be friends.
It is okay that you decided already as long as you thought about it. It means that you are considering your friendship which is important.