My mother owns a toy store and highly recommends this product. She says it's great for eye hand coordination, dexterity, counting, and color recognition. It's a great seller for that age group at her store in NY.

Here's one from LeapFrog. They have a lot of other toys that are both fun and educational.

I taught preschool for a few years and I noticed that toddlers were always fascinated by things that were magnetic.