I've got myself a current iPod touch with the intention of letting my kids (which are admittedly no toddlers anymore) use it, too. However, it's understood it doesn't live in their room.
It works out very well for skypeing, playing card games or mahjongg and a surprisingly huge percentage of creativity with the voice memo and sending their pieces of home-made music to relatives. And, yes, videos in times of boredoms and longish waits.
They got their own iPod nanos when they were 6 years old, and while those are somewhat more grimy than I'd wish my personal gadgets to feel they are still cherished, looked-after well and fully functional.
And I have never let my kids get educated (or rather entertained/looked after) by tv, their daily consumption went from 10mins per day at age 2 to 0.5 to 2 hours a day (depending on weekdays or weekends/vacation) now at 9 years old. However, I know not many parents know or care about the impact of tv on their little kids.