Is it o.k. to look at my hands when I play? This is question that comes up with newer students. My quick answer is "never at the picking hand and occasionally at the fretting hand". In the beginning a student will do more looking as they are getting used to playing the guitar but you want to learn to find the strings and frets without looking as soon as possible. When? That's a fine line sometimes. The more students develop the habit of looking the harder it is to break.
I recently had a student come in after practicing a blues piece all week. He had obviously worked hard on the song but before he would play any note he would look at both hands to make sure they were correctly positioned and proceed. I had to carefully break the news to him that he will never be able to play the song that way and had to learn how to find the strings without looking. You will make mistakes in the beginning but it will get easier. Looking at your hands when you play is comparable to looking at your feet when you walk and it won't work! The picking hand serves the fretting hand and as I mentioned you will need to peek at the fretting hand now and then, but not the picking hand.
If you walk into your house at night and the lights are out you will know precisely where everything in the room is placed and avoid the desk, couch or whatever. Even in the dark. It's because you are seeing it in your mind. This is the same thing that happens playing an instrument. You learn to see the neck in your mind and the spacing etc. In the end it makes playing much easier and more enjoyable. Before going to bed at night I often go into my office and pick up my guitar and play in the dark as an exercise to keep myself senses sharp. Try it!