Timmy suffers from Terminal Tourette syndrome, which causes him to say many things that get bleeped out. This bleeping isn't limited to the audience: it gives Timmy a painful ringing sensation and for a while prevents Sam and Max from learning Peepers' real name. Timmy's disease can apparently be cured by an expensive operation, driving his father to attempt to gather enough money both through criminal activities and by pursuing a career in boxing.
Unfortunately, neither of these paths pay off and Timmy dies in What's new, Beelzebub? before Jimmy manages to amass enough money. With his complete innocence he would have gone to heaven, except for the fact that Sam & Max switched out his record with Jimmy's. They do eventually bring him back from the dead, though this still leaves his Terminal Tourette syndrome.
After coming back from the dead, Timmy befriends the Maimtron 9000. When Sam and Max stop his words from being bleeped out by replacing the list of forbidden words in Hell by Hugh Bliss, the ringing sensation in his head goes away and it turns out that the "profanity" he utters is rather mild.