Walter's supposed to be... wel... twerpy. The fact that the character's such a small little twerp that's inexplicably related to the extremely tall Jason Segal (who, just a week ago played a convincing Andre the Giant on SNL). I don't think a more complex looking puppet (like Johnny Fiama) would have carried that across as well... not to mention you'd be lost out in expressions like this:
The fact he's able to contort his face, Kermit style, really spoke to a character that's pretty emotional and accident prone. Someone as stiff as Miss Piggy or the Chef couldn't pull off the same extreme cartoonish expressions (well, Piggy can scrunch up her nose and look angry).