In a recent interview with Junichi Masuda and Ken Sugimori, directors of development and art respective of Game Freak with @Gamer Magazine, they have revealed how they develop each Pokémon series and revealed some rejected Pokémon!
One major point in this interview was that of a rejected Pokémon design, based off of the first cloned sheep, Dolly because they find it too controversial. Yeh, that is coming from the guys who created Cubone, a Pokémon who wears the skull of its dead mother!
Aside from rejecting a Pokémon design based on Dolly the Sheep, they also revealed that the infamous Pokémon shape-shifter, Ditto was based on the iconic smiley face and considered him as the weirdest Pokémon that they designed.
The Game Freak heads also revealed that Pokémon Black and White were geared to look different from other Pokémon games, while retaining the prominent connectivity feature that sparked interest in the Pokémon series for many early players. Masuda specifically mentioned that he dreamed up the concept of a world with "no borders... Pokémon and people together," during a trip to the United Nations building in New York City, the basis of the Unova (Isshu) region.
Source: BulbaNews via kotaku