Should this item go on Keychains, or Plushes?
It's both at once! However, since a plush doll makes for a rather poor keychain choice (it's still big as fobs go) it goes onto plushes. This is a mini doll that you could win out of a UFO catcher prize machine. It's only about 5 inches long (which is small for a doll but big for a keychain) and has a beaded chain loop to attach it to things.
Because it's so small, the construction suffers a little bit. The nose is a flat flap (see how it goes sideways) as are the spikes & ears which can just lay down & not look quite right. The shoes are a bit long/tube like & the hands are flat felts pressed together. The tag marks it as a 1996 item. This was supposedly released to promote Sonic the Fighters, but is not labeled as such. It's still a neat little item! 

More Sonic the Fighters mini keychain plushes! Apparently, they made the whole cast (or most of it) as tiny simple dolls. Here, you can see Espio, Amy, Knuckles, Fang Knack, & Tails. The Sonic from the set is pictured above. Who's missing? Bean, Bark, Metal Sonic & Eggman, if they included him. Neither Amy nor Fang Knack have their weapon included. They're all cute in the mini size, and there's clear evidence they tried to include each detail (different shaped chest color patches, pleat Amy's skirt, Knuckles gets big (if flat) fists etc.)