Toddlers can't usually play much beyond percussion instruments but they will still enjoy watching and helping you play. I have an old beater trumpet that they can try without worrying about it getting scratched or dented. They also enjoy switching mouthpieces and mutes. Playing guitar and letting them try strumming is fun too.
Another realy good music toy for kids is Boom Whackers. They are essentualy tuned plastic tubes by hitting one you make a note. my nephew who is almost 6 now has had them since he was a baby. At first he would just bangh them arouund. Then as he got older he made beats and my brother taught him about harmony and chords with them. He uses mallets or drum sticks sometimes to play the notes. One of his favorte games is drum circle where every one gets a tube or two and makes a beat and then you go in a cirlcle and start making up a beat trying to harmonize with the rest of the group. It might be that my brother is a musician or that my nephew is naturaly tallented but i recon that most of my nephews love and tallent came from being exposed to instruments at a very young age. he plays the piano and the guitar not brilliantly but its a start. BoomWhatkers: http://www.westmusic.com/1002405-kids/k5010-boomwhackers?gclid=CKqWrdG8s6cCFZNd7AodJm75_w
BoomWhatkers: http://www.westmusic.com/1002405-kids/k5010-boomwhackers?gclid=CKqWrdG8s6cCFZNd7AodJm75_w