The Cupid's Grenade is simply a cherry. It is found on Sublevel 4 of the Snagret Hole, and is located in one of the alcoves. Make sure you deal with the various hazards.
In 2-Player Mode[]
In 2-Player Mode, this item only takes one Red Pikmin or Blue to carry, and is brought to the Onion. When such is done, a roulette appears and you'll obtain a special ability/item that will give you the upper hand in battle.