Gave into temptation and bought myself an iPhone. What can I say? My daughter has an iPod Touch and I can't fall behind!
Then I discovered how many fabulous apps there are for the iPhone which a two year old can use! Not to replace one on one time but perfect for those checkout lineup distraction moments.

ABA Problem Solving Game
Super cute rhyme matching game.

Talking Roby the Robot
A cute little robot who repeats your words back to you in his wee robot voice. Cute and entertaining - similar to the Talking Carl app.

Signing Time - ASL Dictionary Flash Cards
I did the Baby Signing program with my now 2 year old "before there were apps" like this one. :-) This app is amazing and helps your baby to communicate long before he or she can speak to you with words.

Dora Saves the Crystal Kingdom
Use the colouring pages or tilt-to-steer game - my wee one loves it.