Say what you will about Disney, they do know something about content for kids. Since my toddler-daughter Ivy learned to use the computer mouse this summer, she's spent a lot of time at the Disney Playhouse -- she requests games before TV most times, and it's somehow easier to let her play rather than watch something passively.
The site is so well designed, a two-year-old can not only navigate individual games like this fantastic word game, but she can move between subsections (see the crayon navigation on the word game) to find related games and activities, and even use the global navigation at the top-level page to switch sections (maybe from Rolie Polie Olie to Clay).
It's an amazing learning environment allowing exploration, creative expression and real learning...and it's free. Why would anyone by software when this great stuff is available online? Also check out the Sesame Street Game Room and Nick Jr. Playtime for other great examples.