Design #1: Fairydillo
Catherine started like a lot of the Pennyverse lads do: with us looking at a species and thinking "that'd make for a good lad". In Cat's case, we already had Sebastian, so other armadillos in Pennyverse only made sense, and the pink fairy stands out among them for its color (pink) and size (tiny).
Days later, we'd discover an anime girl with a shrimp on her head being passed off as a pink fairy armadillo and found it to be offensive enough that Cat came out of the ordeal. She was initially a similar size and shape to Seb, at that point, rounded, though without ears (as pink fairies don't have those). We didn't have a name for her yet, so we simply referred to her as "Fairydillo".
Design #2: Size down, fluff up
2-3 weeks later, "Catherine" was decided by Caby to be her name, so we could finally introduce the group to her. ("Christina" was also an option. I am very glad we didn't go with it.) Even before she was officially a character, we knew she'd be paired with Seb and she'd be rather cool and collected where he wasn't. While we were initially rather sure there wasn't anything romantic between them (and there still really isn't, at least in the traditional, snuggly kind of romance)...they've started holding hands more, yes.
Caby's always had a bit of trouble with her design. Catherine is the only character who later got a total ref redraw (as opposed to Arthur or Penny, who got ref updates but only for their colors and not so much their forms), shrinking her down to be much smaller than Seb and also much fluffier. (Seb has also since gotten a lot fluffier.)