While riding the Ferris wheel with Holly, Michael does the impossible: he almost says "that's what she said," but swallows it at the last second. Which, coincidentally enough, is what she said.
Dwight and Meredith break into Holly's car so Mose can stick a live raccoon in there. Holly busts them, and Michael angrily rushes over to yell at Dwight and tell everyone that Holly is the best thing since World War II. After that moment breaks up, Holly thanks Michael for sticking up for her, and leaves her hand on his arm for a little while. "Sometimes I don't know how to react when a girl touches me," an excited Michael THs afterward.
Phyllis sends Kevin to the store buy more BBQ sauce, and Holly is really quite proud of Kevin for being independently mobile and all. He waves dopily at her as he drives out, then leers at us through his other window. Oh, this is my favorite storyline of the episode, if not the entire season.
Michael takes the microphone to sing a song he's written for Toby: it's a "parody" of "Goodbye, Stranger," with about three words changed to "Toby." But since it's the entire song, it's intercut with Pam THing that she's going to miss Toby, and always thought he was kind of cute. Michael finishes his big number with the predictable falsetto histrionics.
Afterwards, Holly comes up to congratulate Michael on his performance, because she doesn't yet know about how he does this at every opportunity until everyone wants to kill themselves. Kevin calls Michael on his cell, summoning him to the grocery store. "It's a big day for him," Holly says, which Michael blandly agrees with before heading off. They share another dorky-humor moment before Michael walks to his car.
When Michael gets to the grocery store, Kevin's rolling a shopping cart out next to none other than Jan. Michael isn't exactly thrilled to see her, especially as a reason for being called away from the party, but Kevin knowingly tells him, "I think you kids have a lot to catch up on." And when Kevin rolls his cart away, it reveals something about Jan that the show has been hiding about Angela since the strike ended. You guessed it -- JAN IS PREGNANT. Sorry about the all caps there, but when my jaw dropped it landed on the shift key.
Back from the ads, Michael and Jan are sitting at an outdoor table and talking. Michael is all excited and solicitous about the baby that he naturally thinks is his, until Jan has to admit that he's not the father. She insists she didn't cheat on him; she went to a sperm bank. "I need to make this one count," she THs after breaking the news to him. As they say goodbye, Jan invites him to her Lamaze class the next day, but he demurs. Afterwards, he THs that he always knew two things: he loves sex, and he wants to have kids. Which he thought was a decent combo, but now he's thinking it might have to be one or the other. Yes, a lot of parents discover that for the first year or so as well.