Okay! First, thanks for all the fabulous recipe suggestions. However, I decided to stick with what I originally thought would be easiest and most fun for 2-year-olds: Sugar cookies with frosting and sprinkles.
I know, I know... sugar cookies are kinda boring—especially since I got such good suggestions—but I didn't want to make anything ghoulish like this or this or this or this (the last thing I wanna be is the aunt who came in from Brooklyn and scared the bejesus out of the children) and a lot of the super-cute stuff (like this and this) either didn't seem like it would be too fun for kids to decorate or was too complicated.
Anyway, after looking at a gazillion sugar cookie recipes, I decided to use this one because the dough only needs to be refrigerated for 20 minutes before rolling it out (as opposed to an hour or two.)
My sister forgot to tell me that the play group was scheduled for 10am today, so I have to go! But before I do, here are pictures from our morning shopping trip: