To make villagers happy, Naruto must do the following sidequests, each having their own achievement as well:
Ninja Races (Ninja Rocket)
Sexy Jutsu performances (Sexy Girl)
Ramen Deliveries (Delivery Boy)
Hide & Seek (Leaf Village Sleuth)
Completing a mission will result in everyone involved becoming nice to Naruto. For instance, each child in the group at the hide and seek mission will be happy with him when he finishes it, ever person he performs a sexy jutsu for, and so on.