There is a possible candidate from the time period you cite, but it
does not match several other details you recall. In 1970, NBC
Children's Theater broadcast an award-winning 48-minute episode called
"For the Love of Fred," in which Geoffrey the Giraffe, Albert
Chipmunk, Calvin Crow, and Magnolia the Ostrich help their friend
Fred, the caterpillar, turn into a butterfly (he has apparently
forgotten how to do this). While one description of the show refers to
it as "animated," the characters were actually puppets created by Paul
and Mary Ritts, who had quite an illustrious career as puppeteers.
The potential matches to your memories are a "he" caterpillar who has
"friends." Also, Mary Ritts was apparently "an accomplished singer
both as herself and as Magnolia the Ostrich,...[and]sang hundreds of
songs on television with diverse and noteworthy accompanists including
Lionel Hampton, Skitch Henderson, Mort Lindsey and 'The Tonight Show
Orchestra,'" making it plausible that Magnolia and/or company may have
sung "What the World Needs Now," given the context of the general
story outline/title of the feature. [Quotation from second link
Here are several links with more information, if these details make
this a possibility worth investigating. Mary Ritts actually died just
last month at the age of 95, so a couple of these items are reporting
her death and summarizing her career.
"Co-Creator of Ritts Puppets has Passed Away"
[includes small inset picture of puppets]
The Princeton Packet, May 19, 2006: Obituaries, Mary Ritts
History of the Ritts Puppets, with pictures
"Puppets are Creepy," a compilation dvd/vhs that includes "For the
Love of Fred," from a website that features so-called "scary videos"
(with the word "scary" very broadly interpreted). Two pictures at the
very bottom of the page are from the Children's Theatre feature.