Do you know the lift-the-flap books about a puppy called Spot, by Eric Hill? My son loved them. Because he looked after his books, we were able to hand them on with all the flaps intact to two little girls we know. The books are simple, with large clear illustrations perfect for toddlers. They quickly move from read-alouds, to becoming books that children choose to "read" on their own. And later, when kids are learning the skills of decoding and word recognition, they are beloved friends to practise with.
I found a neat website that celebrates all things Spot. And guess what? It has a story creator where kids can create and watch Spot stories. The on screen editor is very simple, a matter of dragging characters and props over. You can also add speech bubbles and limited text - limited because it's a matter of finding a word you want and dragging it to your workspace, rather than typing it in. There's a little video that kids can watch to learn the steps involved. They can watch Spot dvds, and there's a buying link.
There are also some simple games like dressing up, where Spot has to choose the items he needs for the beach, gardening etc, and activities that encourage kids to count, solve problems and explore interactively. This is a nice one for youngsters who already enjoy the Spot books and want to play with him, or a cute way to introduce your children to picture books that may very well become their new favourites.