It's a Sonic stress-ball! A Sonic ball is a popular item, since he rolls around in a ball in all the games. This is a squishy, squeezy ball shaped like classic style Sonic. It comes in a square box with the slogan "Don't get in a spin". The purple rectangle on the box says "Collector's Edition". The ball kind of illustrates the oddity of some of the old graphics. Where did his legs & body go? His arms are shown coming out of the sides of his head, and his lower face is really large, to hide the lack of body.

Notice they did add the buckle texture to his shoes, and that his ears are actually sticking-up points. If you want to collect this ball, remember the rule of squishy toys: you can squish it when it is new, but don't squish it too much or it may become creased. Also, as it ages, it is best to not squeeze it / leave it in its box because the paint/rubber exterior sometimes doesn't age that well to stand up to use.