Kappi is standing on the far left side of the map in front of his house in HKO. On top of his house you can see a Kappi-statue standing on a surfboard. This little guy loves surfing and will make you play your first minigame-quest in HKO. Kappi seems to have a smiling and dancing flower for his best friend.
A kappa is a japanese water-creature who loves to play pranks and carries water in his lilypad-like "crown" on his head. His favorite food is cucumbers, so you can calm or befriend kappas by giving/offering cucumbers to them. Evil Kappas are said to suck out energy of people, especially children. Other kappas are friendly and also helpful to humans. All of them can speak (japanese) and often like to test humans with different challenges.
Sanrio has devised not only Kappa no Kappi in 1994, but also features other Kappas like Kappa Rumba (1988), who loves watermelons, or the family Tonari no Kappasanchi with a mother-kappa and three kappa-boys.