I’ve done this for a 3d challenge with the theme “sheep(s)”. I’m a blender and render noob (using it since 2.43, rendered with internal). Hope you have played worms 
Tools of the trade: Blender 2.44 and Gimp
Original
Version
And another cartoony version:
Some people told me the rendering is weak (and yes, i admit i’m a render noob). I may release the .blend file soon if anyone is interested in rendering it’s own version. It would be nice to compare…
I have to say, I really rather prefered the 'ol 2D worms… Anyhow, back to your piece, since it’s supposed to be cartoony I suggest that the sheep be much more simplified than that. The original Worms 3D was very simplified, with only a curvy tube and some floating spheres for hands. The hind legs on the sheep look really awkward, maybe if they were simplified as the front legs it would look much better. Their fur could be simplified even further too, using larger and fewer “bubbles” to represent their fleece.
I’ll leave the rendering and material crits to someone else who’s much more knowledgeable than me.
Yes, that could have worked, thanks. I too like the old 2d worms games more.