He looks good to me without hair. But it depends on how you see the character, really.
Will the finished puppet be plasticine, or cast in silicone or some other material? Or is it made from Sculpey?
I've used a few different approaches for hair. One is to sculpt it. If it is cast in silicone or latex or hard material, it has the benefit of not being disturbed when you animate the puppet. Sometimes I use a bit of fur fabric, cut to make a wig, but with that you do have to try to avoid touching it when you move the puppet. It works for hair that isn't too long, and can be styled a bit with her gel or watered down pva glue. But not as styled as a solid sculpted hairdo. For really long hair you need some kind of long fibre, like fake hair from a hairpiece. Somewhere on Youtube there's a tutorial on laying up the layers of hair for a ball-jointed doll, which can also be applied to a stop motion puppet. This is Part 2: https://www.youtube.com/watch?v=_PQQJgrCSKg&t=325s
Another one uses yarn, but the yarn is combed out so it doesn't look like yarn: https://www.youtube.com/watch?v=zAC6n20Qr_A
Ok, he is made out of sculpy III.