In a large bowl, cream butter and sugar until light and fluffy. Add eggs, one at a time, beating well after each addition. Beat in lemon peel and vanilla. Combine the flour, baking powder, baking soda and salt; add to creamed mixture alternately with sour cream. Beat just until combined. Fold in coconut.
Fill paper-lined muffin cups or mini silicone cupcake molds three-fourths full. Bake at 350° for 10-22 minutes (range is due to the difference in sizes) or until a toothpick inserted in the center comes out clean. Cool for 10 minutes before removing from pans to wire racks to cool completely.