If your kids are coveting your Kindle, you may want to get them the VTech V.Reader, which serves as a highly interactive e-reader for kids. Animated stories, games and activities help engage them in learning to read. The V.Reader has a clear plastic cover that closes over the touch screen (like a book) and a stylus makes kids feel like mom and dad. The VTech V.Reader Interactive E-Reading System comes in pink and blue.
Sesame Street's Elmo and Zoe take a trip to the zoo and help your toddler learn all about letters and letter sounds. This game is available for the PC, Wii and DS and uses controls that are friendly for young kids. Kids also may enjoy Sesame Street: Cookie's Counting Carnival (Compare prices).
The LeapFrog Tag Junior Book Pal is an educational and engaging toy for young children. Tag Junior is a chubby device with an optical sensor that can "read" special books, play games, and track the experiences a child has. It works with LeapFrog's online Learning Path that shows parents what kids are learning and how. The Tag Junior is recommended for ages 2-4, but even a younger child will enjoy exploring with it with some adult supervision. The Tag Junior books are board books and they're sturdy enough for whatever your infant or toddler throws at them.
The whole Giggles Computer Funtime for Babies series has been a hit in our house. My favorite is the ABC's and 123's, as it is engaging even after they reach toddlerhood.