One of the most difficult and yet most rewarding parts of setting up a puppet program is the development of the characters. In the case of our Cidade Feliz project, we are currently designing and building our puppets from scratch after having given them personalities and character traits.
Many church programs rely on mass produced puppets purchased from any number of companies. Even so, the development of a puppet's personality is key to the success of a program--key to how well the message is transmitted.
Here is a video of Jim Henson, Frank Oz, Michael Frith, and Kermit the Frog talking about character development.
By the way, I got this from an outstanding collection of puppet videos put together by Andrew from Puppet Vision. If you are at all interested in working with puppets, you need to check out these videos, and be a regular reader of the Puppet Vision blog.