Since I've seen mention of the banana smoking so much and have yet to see anyone mention what I think Donovan may have been talking about - I'll interject here....Since I was born in 1950, I lived through the 60's and have performed dozens of Donovan songs myself (so I'm happy to see so many others who appreciate him) - anyway, my take on the "Mellow Yellow" is: if you listen to the words, he says "Electrical banana is going to be a sudden craze, electrical banana is bound to be the very next phase"
Well, shortly after this song (a couple of years in the 'pop' chart world) an incredible band came upon the scene - "The Youngbloods" with the LP Elephant Mountain and guess who played the "electric" piano? His name was "Banana" -- I think Donovan had already heard them (maybe even knew them) and knew that they would be "the very next craze" Anyway, that's my take on it (although, I too scraped the insides of the bananas, baked them, etc.)
I admit it was only later when I saw the Youngbloods performing (at a small venue, where I helped work the light show) did I learn about "Banana's" name and it all made sense to me (but maybe it made sense cause I smoked too much banana!)