Frogglet can be found in the Marsh level. In front of the third crypt (the open one) you'll find an "X" marked on the ground. Dig there to find him.
Frogglet grabs nearby items with its tongue. These items include: food, all sorts of monetary objects, and weapons. It could prove very useful while in the middle of a hard fight with many enemies, when you can't stop fighting just to get the food (Insane Mode, for example). However, it does not generate its own items and picking up items isn't too hard anyways, making its usefulness questionable.