Chao are a group of small creatures from the Sonic series. They generally are good, and were used as virtual pets in the Sonic Adventure games.
I missed out on the Dreamcast version, so I eventually played Sonic Adventure DX after Sonic Adventure 2: Battle. Which was a bit weird on how Sega chose to re-release the two games. I had some fun, but the features on how to raise your Chao were gimp compared to the sequel.
I had a lot of fun raising my chao in Sonic Adventure 2: Battle on my Gamecube, and I'm not afraid to admit it. They could evolve, change color, hairstyles, and play around. Sure they didn't do much, but it was a neat idea for the time at least. I can't believe a game like Sonic Adventure had this but not something like a RPG.
You even had a few world stages you could later unlock for your chao. From Heaven, to Earth, and to a Dark-setting with red "water"...yes water.
You could also battle and race your Chao. Which was a fun time-waster but got boring a little quick.
What was really cool is that in both versions, you could transfer your Chao into a more portable world.
Dreamcast owners got a few quests on their VMUs, though I never got a chance to play those. A few friends had nice things to say about them though.
Gamecube owners could transfer their Chao to their select Sonic games on Gameboy Advance. I put some of mine in my copy of Sonic Advance 2.
I think my favorite Chao is the huge walker robot from the battle mode of the Gamecube version. It has a huge beautiful laser attack that I loved using.
My brother would always man the Dark-Chao walker to make it an equal match. Good times.