Hi Angie,
Sometimes helping a child transition to using the toilet is hard work, both for the child and the adults involved. I would encourage you to move toward a "working with" approach called Toilet Learning. This is different from stickers and incentive programs as it honors the child's abilities and individual development; the emphasis is on the whole process, from learning the body's cues and signals and responding to them, to the actual "going to the potty", cleanup, and self-care (wiping, washing hands, changing clothes after accidents).
Here's a very helpful web article with information that is simple but very easy to use:
http://www.betterkidcare.psu.edu/AngelUnits/OneHour/Toile...
A "potty training" technique, though still very popular, focuses primarily on the "product" and the use of positive reinforcement to continue to elicit those behaviors. Although our culture relies on this sort of thinking (which sounds like it should make sense and is very appealing) there is clinical evidence that actually disproves the pop psychology of "positive reinforcement" as a tool to affect long-term changes in action or behavior. Check out Alfie Kohn's "Punished by Rewards" if you are interested in finding out more about this topic.
Ultimately, we want our children to learn to use the toilet for their own edification and growth, not to please us. And please, never use punishments to try to "teach". Taking a beloved item away from a child only to make them "earn" it back is heartbreaking to a child and makes the process of using the toilet an emotionally high-stakes situation. Our children need encouragement and a low-key attitude from the people they trust in their lives, and not to be punished for their failed attempts at trying new and challenging things.