Board books are always great for this age and you have lots of recommendations. "That's Not My Monkey" (Usborne) and Sandra Boynton were big here, and Robert Munsch (currently Mortimer is top choice) as they get a little older. They love pretty much anything with good pictures and rhyming/good rhythm.
For the two year olds, maybe something from
http://www.wowtoys.com/. They work using forward momentum instead of back. You can get these at Castle Toys for about $30, probably at Gracie & Gruff too if that downtown one still exists.
Also, Melissa & Doug toys, particularly beginner puzzles. Just don't get the one where the kid learns how to open a bunch of different locks - that's a bad choice.