Here is a suggestion:
http://www.walmart.com/catalog/product.do?product_id=1062...
http://www.walmart.com/catalog/product.do?product_id=8464938
http://www.walmart.com/search/search-ng.do?search_constra...
My kids LOVE these. When they are at this age and older, they love "kids sized" kid furniture. It will NOT go to waste, it WILL grow with them, AND it's useful.
We have even taken it with us to our local hotel for weekends, and the kids sleep on it. It's so portable, they could even take it to Grandma's house too.
My daughter is now 6 years old and my son is now 26-27 months old...they BOTH still use it and love it and use it a lot. It's well made. We got ours from Walmart.
We got this for our son when he was only about 12 months old, and my daughter when she was about 5 years old. They have not gotten "tired" of it.
It's a nice thing for under the tree. They have "boy" versions too.
If you get BOTH of them this... then they won't "fight" over it. This is why, we got both of our kids their own. Because they used to fight over the 1 that we had.
Good luck,
Susan