While I labored DD1 (24 months at the time) ran errands with my Dad. However, when it became clear that birth was near, she was home with us. Although, technically, she was in the kitchen baking a cake with my younger sister. She knew something was happening, but for the most part was uninterested. (I was in the masterbedroom by the time she came home, fairly secluded from the rest of the home.)
As soon as DD2 was born we brought DD1 in to meet her. Then, after everything settled down we had a gift for DD1
from her younger sister. (A new baby doll and sling.) In those early weeks I would walk and sling DD2 while my eldest followed me around with her baby slung. Rocking and walking.
DD2 spent that night in the other room with my folks, but returned to our bed the following evening. (We were still co-sleeping.)
One thing that we did to "prep" her was that we brought her to all our appointments. We talked to her about where babies come from and we explained that "Mommy is going to have to work hard."
She got involved during labor by helping my younger sister get together a fruit plate for me (and herself

) as well as bake the birthday cake.
We even bought the homebirth story book, and read that a few times during the pregnancy.
This time around DD1 will be 3 1/2 and DD2 will be 21 months. I plan on having my younger sister help out again. Although, depending on how things are going, I might actually allow DD1 into the room for the actual birth. (If she wants to. She tends to be fairly intuned and sensitive to emotion. So I don't want to cause her distress that she might later associate with the baby.)