Well...I don't see how this would be appropriate for Sesame Street. But, at least she is only famous b/c she is an amazing musician. The only reason.
So apparently this is actually a response to her being criticised about wearing a...eh, somewhat lowcut top on Sesame Street. SNL Clip. It's fairly funny, but at least she can make fun of herself.
Here's the original Sesame Street segment that was pulled. I really don't see anything wrong with this. Maya Rudolph said it best: "character also jokingly came to Katy’s defence saying: "Who cares if kids are looking at boobs, all right? Boobs feed babies"