Here's a video about producing "Sid the Science Kid". What I've always found most interesting about the idea of digital puppetry is it's ability to create the animation in real time. It could effectively be the genesis of a cartoon performed live.
http://www.youtube.com/watch?v=GN8WbHomQJg&feature=related
http://www.youtube.com/watch?v=GN8WbHomQJg&feature=related