Only colloquially. Technically, happiness refers to a much deeper sense of well-being than cheerfulness, which is merely an outward display of positivity. Happy people will almost certainly be cheerful, but cheerful people are not always happy.
I think "My friends are fun" might work. Does it? I think "funny" has a connonation of "making you laugh", which might be a negative characteristic of a person—that's not what it is about (e.g., "You speak funny")
Yes, "My friends are fun" would work. "Funny" has two different meanings, one meaning "strange", like your example, the other like "That was a funny joke", and the second is much more common, so "My friends are very funny" would work here.
What I mean is that normal person would say "my friends are funny" . Haven't heard from anyone that "oh, you are so jolly" or "cheerful" and i say that not because I'm grumpy, it's because normally these words are not used this way )