There is no doubt that the "random stuff you need for your baby" market is thriving, and in order to stand out amongst the sea of weird knickknacks designed for optimal child-rearing, companies need interesting and eye-catching names. However, Jimmy Kimmel is pointing out that things have definitely gotten a little out of hand.
Also, parents probably feel ridiculous enough placing little tiny party hats on their baby's genitals without having to say the words "Pee pee teepee." Besides, that sounds just a tad culturally insensitive. Just sayin'.
That Bill O'Reilly joke was good enough to justify the entire existence of the "My Brest Friend," though. Good work there, Jimmy.