Seeing this really brought back childhood memories. (Ms. McCarthy - are you out there?) Have you ever played with a felt board?
It's a mounted piece of felt with various felt cut-outs that you can use to "stick" to the board. Your children can act out different scenes from a story or create their own show. We like the idea of felt play house with furniture and accessory pieces that can be moved and rearranged again and again (perfect for the future interior designer).
You can order yours at Craftsbury Kids (either large or small size) or consider making your own.