One of the crafts I just finished with my two year old is magnets. You can buy a sheet of magnetic paper for 1.00, then, we made hand prints, she colored some tree cut-outs, and painted some heart cut-outs. I then cut out the shapes and stuck them on the magnetic shee, cut that out, sealed them, and they are very sweet, if I do say so myself. Good luck!
Also, I used all of her old paintings that she has been doing for gift wrap, and that seems to be very popular as well.