When the Sonic Team started creating Knuckles, they looked to the animal kingdom for inspiration. Many designs for his character were made based off of many different animals. The final form of his character, the Knuckles we know and love today, was based off of an echidna.
Be honest -- had you ever even heard of an echidna before you were introduced to Knuckles? I know I hadn't. I'm willing to bet most fans hadn't. I used to wonder why the Sonic Team chose such an unrecognizable animal. After reading a little bit about echidnas, it became obvious, though. The echidna fits Knuckles perfectly. Let's take a look.
What is an echidna? In short, an echidna is a spiny anteater. With the platypus, it is part of a group of animals called Monotremes, grouped together because of shared characteristics. The biggest characteristic Monotremes share is the ability to lay eggs. (As mammals, laying eggs is a pretty unique way to reproduce.) Like anteaters, echidnas feed on ants and termites, digging through dirt and grabbing them up with their long sticky tongues. Echidnas are nocturnal animals, active when a variety of predators are out hunting. When they feel threatened, they simply roll themselves up in balls for protection.
Here's a little-known fact floating around the Sonic community: Tails was originally supposed to be the guardian of the Master Emerald, but the Sonic Team all agreed that he didn't look the part; he was too dang cute. Afraid that Sonic would turn into a "cute" game series, I guess, they wanted Knuckles to look tougher, and it's my opinion that they ran with Sonic's popularity and looked for an animal that shared characteristics with the hedgehog, but not one that shared too many characteristics. They didn't want a Sonic copycat, after all. They wanted a new, completely unique character. The echidna is far away from the porcupine and hedgehog, but is similar enough to accomplish what they were looking for.
Many of Knuckles' characteristics and abilities are consistent with those of the echidna. In Sonic Adventure, he digs into the ground for pieces of the shattered Master Emerald much like echidnas dig for prey. Knuckles can also roll himself up into a ball, like echidnas do when they feel threatened.
The ball was likely the echidna's greatest appeal, as Sonic and Tails both did so in regular gameplay, and Knuckles shares a lot of Sonic's abilities. Sonic's spin dash could very likely be done by an echidna.
The way echidnas break up termite mounds and anthills with their paws could very well have been why Knuckles' hands were such a main feature of his. The Sonic Team wanted to create a character who could break through walls. I think that behavior in echidnas is probably indirectly more or less how Knuckles got his name.
So no, the echidna is not easily recognizable, or well-known, but it is perfect for Knuckles. I can't imagine him as any other animal.