Pee Wee Babies are a parody of Beanie Babies. They are little stuffed animals that some people, mainly young girls, like to collect. In iDate a Bad Boy, Carly was freaked out that her boyfriend Griffin collected them and was quite obsessed with it. Griffin breaks up with Carly when he overhears her talking about his obsession with Pee Wee Babies negatively.
They appear again in iBeat the Heat, when Griffin needs to keep them in Carly's apartment because the high temperature could deform the toys.
There are many different Pee Wee Babies. Griffin has hundreds, and he mentioned an annual convention. The real-life Beanie Babies also have a convention. An example of a Pee Wee Baby is Peter the Penguin, one of the only prominent ones to have been seen on the show.