Ilan Schifter, a recent graduate of NYU's ITP, came up with a inflatable game-space for toddlers called ToddlePuff. Here's how Ilan describes it:
ToddlePuff is an inflated interface that incorporates 16 proximity sensors and acts as a game controller for toddlers. It surrounds the child and encourages full body motion. It blocks the toddler's eye sight to create an immersive experience and is wider than a toddler's arm span to encourage movement. An animated children's story is displayed on a screen and told through the speakers. Images of characters from the story are placed on different locations inside the interface. When a character blinks on the screen, the child needs to find the matching image on the surrounding inflated walls and touch it to resume the story. The interaction inside ToddlePuff develops orientation, coordination and speed.
Here's a link to a video of two young sisters playing ToddlePuff. Even without the inflatable environment, kids may enjoy the "Flat for Rent" story, available, ToddlePuff.com.