Confuzzle is a portmanteau word, formed by the conjunction of confused and puzzled. It's a patently silly word, but its use is surprisingly common among adults and teens.
Confuzzle seems to have originated in the world of Winnie the Pooh, specifically the Heffalumps and woozles song from the Disney film The Many Adventures of Winnie-the-Pooh, where it is spelled 'confusle', and rhymes with woozle. (I haven't been able to find any reference to it appearing in the original books by A.A. Milne, but I'll double check next time I read them). In modern usage the most popular spelling is 'confuzzle', and is actually most often found as 'confuzzled'* (in the form of an adjective, "I'm confuzzled!", although the past tense "I was confuzzled" is not uncommon). This spelling suggests that it should be pronounced to rhyme with 'puzzle', and this is the way I've always heard it pronounced.
Compare to the more high-brow confusticate, as popularized by Tolkien. The original 'confusle' also goes nicely with bamboozle.
*A run of Google searches found:
confuzzle 13,400 results
confuzzled 211,000 results
confuzzling 15,900 results
confuzle 850 results
confuzled 10,300 results
confuzling 1,860 results
confusle 518 results
confusled 8,350 results
confusling 695 results
confussle 214 results
confussled 5,580 results
confussling 434 results
kthejoker says re Confuzzle: There is no such word in Pooh Goes Visiting and Pooh and Piglet Nearly Catch a Woozle.