I won't enter the debate on whether bubbling mermaids and such do or don't affect the fish exposed to them because I am not a biologist and don't know. But from considerable research and personal experience I do know that what is
important is to ensure that the fish in an aquarium have what their instincts require. It need not be "natural" so long as it is there; for example, a knifefish will readily use as a "burrow" a length of PVC pipe, something it (hopefully) would never encounter in its natural habitat. But the important point is that the item must be provided for the fish's well-being. I'll begin with a citation from one of Peter Hiscock's aquarium design books since he says it so well.
In unsuitable surroundings, fish become stressed and unhealthy. Although water conditions in the aquarium may be ideal, a fish that has developed to survive in one particular environment will still suffer if it is placed in a completely different one. For instance, a fish accustomed to a densely planted environment with plenty of hiding spots will feel highly vulnerable in a relatively bare tank. The fish does not "know" that it is free from predators and, without the safety of hiding spots, will be continually stressed. Eventually, it succumbs to disease and may even die.
I frequently mention the light intensity and colour of the substrate; these two things, perhaps more than anything else save the water itself, are extremely important to fish. Most (though not all) of the fish we house in aquaria are what I call forest fish; they occur in streams, ponds, flooded forest and sometimes swamps in densely forested areas of the tropics. Little if any direct sunlight penetrates the water, or if it does, it is diffused light coming in between the shadows of leaves in the towering trees. The substrate is frequently mud or leaf littered and therefore dark. Some streams are sandy, but the sand is not the almost white sand one frequently sees in tanks but the dull buff coloured sand, and the diffused light and frequently-tannin coloured water means that very little if any light will be reflected off the sand. Some streams are rocky and gravel-based. But in all these cases, the substrate is naturally dark and non-reflective of light, and the fish expect it.
Place these type of fish over a pale or white substrate, and the fish lose their colour. That is not accidental, it is a deliberate defense strategy that nature has programmed into the fish. Fish do this by expanding or contracting their dark chromatophores in an attempt to be less conspicuous. Hyphessobrycon bentosi is one of some 30 species of Hyphessobrycon that form what Weitzman and Palmer termed the rosy-tetra clade; all species exhibit a dark humeral/shoulder patch. When H. bentosi, the commonly-called Roberts Tetra, are maintained over a pale substrate, this shoulder patch disappears completely; but over a dark substrate comparable to their habitat, it is quite visible.
Although it was not intentional, I had first-hand evidence of this only a year ago. I had acquired a group of seven Hyphessobrycon metae, a dark purple-bodied tetra from Peru. I placed them in my 70g aquarium that was relatively heavily-planted, with a natural buff-coloured gravel substrate. During their eight months in this environment, they rarely came out from behind plants and wood. Last July I reset my 90g as it is in the photos, as a flooded Amazon forest aquascape; I used darker gravel for the substrate. All the fish, wood and plants from the 70g were simply moved into the 90g. From the very first day after, the shoal of H. metae were and still are continually out in the open. The reason: the dark substrate gives them a feeling of security because it is natural. Simultaneously, their colouration also darkened from what it had always been in the former tank. They have obviously spawned, as I currently have three 1/2 inch fry swimming alongside the adult fish.
Place a group of angelfish in a bare tank and they pale; place them in a tank providing vertical plants, wood branches and floating plants, and they sparkle and behave as nature intended. The branches and plants can be plastic or real wood and live plants, the fish don't seem to care; they only need the security provided by the objects.
Redchigh's comment on the armadillo is well taken. If the fish perceive this object as a predator, they will be stressed. Dr. David Sands in the 1990's did extensive work on the genus Corydoras, and observed their defense mechanisms using artificial "predators" that clearly evoked a sense of fear in the corys even thought the "predator" did not move.