The easiest topic from which to choose a nostalgic story is, of course, some episode from your childhood or a trip that you have taken in the past. Perhaps you have (or have had) a grandparent or a friend who possesses some rather quirky, but enjoyable idiosyncrasies that you can recall and weave a narrative around. Often older people tend to exaggerate, so using dialogue, you can include a hyperbole. In addition, you can search your memory for some enjoyable instance from one of the holidays or a vacation in which you were with family and friends. If you have ever gone camping with friends, you probably have some humorous incident from this excursion in which a "crazy" friend ventured into trouble with laughable results.
Another suggestion to assist your writing of this humorous nostalgic piece is for you to read examples of this type of writing. Certainly, some of the stories of Mark Twain illustrate well the use of hyperbole and euphemism. For example, you may want to read a story such as "The Celebrated Jumping Frog of Calaveras County" which contains instances of exaggeration and humor. Truman Capote's "A Christmas Memory" is a great example of a nostalgic narrative that is both poignant and humorous as his eccentric relative prepares pound cakes for their "best friends" who are total strangers (hyperbole).
It should not be difficult to employ pun wherever you recreate dialogue in the story. Think of how Shakespeare uses pun with his characters as one says a word and then the other person replies with a different meaning of the word which creates humor. So many times in normal conversation, people form puns on what someone else says, then they say, "And pardon the pun." So, try to recall an incidence from your own experience.
Remember that a narrative essay is much like a story with a beginning, a middle, and an end. Of course, flashbacks or flashforwards can be used, but be sure to keep your narrative coherent so that the reader can follow it.
(For your aid, the links to the stories to which I have alluded are included below.)