Whew, time to revive this old topic - I'm sure lots of people will want to continue posting in here. :P
Of course there's Pikachu, but it isn't the most overrated IMO - at least the older fanbase (especially people who don't watch the anime) doesn't go absolutely ga-ga over it like little kids and TPCi themselves do. (I even kinda like Pikachu at times, depending on a number of factors...)
Nope, the most overrated Pokémon in my opinion is DRAGONITE. It has a so-so design for a pseudo-legendary, which is mostly offset by the fact that it looks like Barney the freaking Dinosaur. Sure it's powerful and useful in battle, but so are things like Salamence and Garchomp, which are even more powerful and not as saccharine-looking - they fill the same role as Dragonite, but do it better.
However, the entire fanbase seems to absolutely adore it (sorry, Dragonite fans), and it's by far the most popular pseudo-legend despite the fact that it's the least badass-looking. Its popularity is probably driven by nostalgia (explaining why fans like it more than, say, Zekrom or Rayquaza), which is kinda reasonable. But wait! It's also more popular than fellow "badass" Gen I and II mons such as Mewtwo, Gyarados, Tyranitar and Zapdos(at least according to Psypoke Idol and that IGN poll)! Only things like Charizard, Lugia and maybe Blastoise (all personal favorites, fortunately) are safe from Dragonite's cuddly wrath. But otherwise, not even nostalgia is safe from nostalgia!
Every time I see that stupid dragon, I imagine it singing "I love you, you love me, we're a happy family..." while I load my bazooka and prepare to blast it to oblivion.
Rant over.