I watched Ponyo last night (and again this afternoon, my mom wanted to see it).
The movie is Hayao Miyazaki's adaptation of "The Little Mermaid" but much better than the Disney version. No evil; just a little fish-girl who wants to be human so she can play with the little boy and a bit of don't-mess-up-the-ocean story. Really cute and well acted (lots of big-name celebrities doing the voice overs) and much much nicer than Ariel & Prince Eric. I think it's probably a lot friendlier to little kids than the Disney version too. Miyazaki's other works include "My Neighbor Totoro" and "Spirited Away"
Ponyo is a Japanese colloquial term and onomatopoeia for what something soft and squishy feels/sounds like.