We bought our son a doll. I picked one up at a garage sale and we bought boy clothes for it, even though we were having a girl. This was 'his' baby so we decided to make it a boy. We took care of the baby. It could go in the bath, so we gave it baths, 'breastfed' it, strapped it in the carseat and took it to the store with us. We showed him how to use 'nice hands' on the baby and we would rock the baby and sing to it. He absolutely loved it and he was only 19 months old.
I also made him a 'big brother' shirt and told him that he could wear it on the day the baby came. We made a welcome home poster for the baby and he decorated a card to bring to her at the hospital. He also bought her a floppy bunny, that she still sleeps with:) He was at the hospital when I gave birth and got to hold her within the first hour. He was so much apart of the whole process and I felt very confident knowing that he would be a good big brother. And he was. I don't mean to brag, but he honestly never hit her, scratched her, bit her, etc. He was so loving and we are proud that we instilled that in him. He would sit on my lap while I breastfed and being the "Miss Octopus" I am, I also read to him while I breastfed.
I hope these ideas help. We also bought our son a small gift from the baby and grandma gave him a special gift as well.