Los Angeles ? Prancing penguins. Rascally rodents. Sociable squirrels. Saber-toothed tigers. The Hollywood hills were alive with talking critters in 2006, possibly the biggest year ever for movie animation.

With the barrage of ads for flicks about cute, fuzzy wildlife and other cartoon creations, are audiences having trouble telling one from the other, and more importantly, are they getting overloaded by animation?

“There’s definitely an overload, and I think everyone recognizes that,” said George Miller, director of the latest animated adventure, the Warner Bros. penguin romp “Happy Feet,” which opens today.

In the decade since Disney and Pixar’s “Toy Story” revolutionized the industry with computer-generated images instead of hand-drawn cartoons, first DreamWorks with “Shrek” and then other major studios leaped into the animation business.

As with the initial novelty of talking pictures nearly 80 years ago, computer animation’s early appeal resulted partly from its fresh look. Now, CGI films have become the standard, so commonplace that the story – not the style – is more crucial than ever in a movie’s success or failure.

“What’s happened is, no longer will people go see CG animation simply because it’s CG-animated as they did when they first saw ‘Toy Story.’ Everything will have to work on its own merits,” Miller said. “Sure, when ‘The Jazz Singer’ came out, people turned up to see sound pictures. In a handful of years, people no longer turned up to hear movies. They just turned up to see a movie they thought was good. The same thing is happening with animation.”

Ten years ago, Hollywood released as few as three or four animated movies a year, with Disney the only steady player. This year, 16 films are expected to be eligible for the Academy Award for feature-length animation, only the second time in the six-year history of the animated Oscar that there were enough movies for a full field of five nominees.

The Warner Bros. penguin adventure Happy

“Happy Feet,” the story of a penguin ostracized because he can’t sing like his brethren but who can dance up a storm, features a voice cast led by Elijah Wood, Nicole Kidman, Hugh Jackman and Robin Williams.

If the movie meets industry expectations and becomes a holiday hit, it should lift overall domestic revenues for this year’s animated films well above $1.2 billion, according to box-office tracker Exhibitor Relations.

That would beat Hollywood’s previous best of $1.18 billion for 2004’s animated movies, which included the blockbusters “Shrek 2” and “The Incredibles.”

But no animated film in 2006 came close to the $300 million and $400 million returns of the all-time leaders, “Shrek 2,” “Finding Nemo” and “The Lion King.”

That’s because none lived up to the quality of those beloved films, and with a new cartoon feature rolling in every few weeks, it becomes easier and easier for audiences to shrug off yet another so-so animated comedy.

“I don’t know if it was the best year, but I think it was the biggest year for animation, with a lot of good work, but a lot of work that maybe fell short of expectations,” said Carlos Saldanha, director of 20th Century Fox’s hit sequel “Ice Age: The Meltdown.”

Disney-Pixar’s “Cars,” from “Toy Story” director John Lasseter, leads the 2006 lineup with $244 million domestically, followed by “Ice Age: The Meltdown” with $195 million and DreamWorks’ “Over the Hedge” with $155 million.

Next year looks huge – though familiar – again for animation, the schedule fronted by “Shrek the Third”; another rodent tale, “Ratatouille,” from Disney-Pixar; a big-screen take on TV’s “The Simpsons”; and another penguin comedy, “Surf’s Up.”

The question is: Which films will cut through the cartoon clutter and find an audience?

“The cream always rises to the top,” said Wood, who provides the voice of the dancing penguin in “Happy Feet.” “What is truly good will be recognized as truly good. What is just part of the flock will be recognized as that.”