Disco Stu - thats a good call. Isnt that episode where they changed the notes of the performance for a code or something?
The songs in Muppet Christmas Carol were good, but I think my fave would have to be the Muppets sketch from the original series where zoot (the saxophone player) has to do that Mancini piece where he only plays one short note about every minute at the end of the orchestra's music.
The sketch preceding it has Zoot saying to the bandleader, "About this piece, give me match and I'll put it out of its misery!!" and the bandleader says "well, I could always find another sax player...." so Zoot says, paraphrasing, something like, "Well, man, let me take a look at this wonderful piece of music, baby...!" Its on the original LP.
add a rather silly and dubious edit: I'd also add probably nearly ALL of Brian Cants songs to Camblewick Green, Chigley and Trumpton. (which altho he is singing them, are supposed to be the plasticine puppet/models okay?! - where's your imagination??!)
eg: "Riding along in an army truck...in a humpity, bumpity army truck..." "Time flies by when youre the driver of a train.." "...Here is a box, a musical box....wound up, and ready to play...." etc
My favourite musical performance by a puppet is unfortunately not available on youtube. It's from Norway's most successful film of all time, FLÅKLYPA GRAND PRIX (PINCHCLIFFE GRAND PRIX) from 1975, and occurs when the inventor plays his soulful theme on a harmonica while he gazes out on the starlit sky. However, the song can be heard (with images of Norwegian scenery) here:
I also found an excerpt of the film itself - dubbed to English - that can be viewed here:
I really recommend people to take a look at that clip, especially if you're at all interested in groundbreaking puppeteering work.
BABES IN TOYLAND, a live TV version of the perennial Sigmund Romberg operetta, originally broadcast, as I recall, in 1954. It had Dave Garroway as a department store Santa, telling the story to some little girl who'd gotten lost. The wall behind him opens, and Dennis Day sings the title song. It also had Wally Cox as the Toymaker.
And, the Bill Baird Marionettes as the the talking toys. These marionettes were very popular in that period, appearing on variety shows and specials. There were even specials created for them, like "Art Carney Meets Peter and the Wolf" with the Marionettes, and I think also a "Sorceror's Apprentice" special as well, though I'm not so sure about this.
The most famous appearance of theirs is in the "Lonely Goatherd" sequence in the movie SOUND OF MUSIC.
At one point, BABES IN TOYLAND was scheduled for DVD release, but apparently it didn't happen. I can't imagine it was very sophisticated. I loved it, but then I was 5 years old at the time...