One of my daughter's friends gave her a shrinky dink set for her birthday. We opened it this morning and made bracelets. These are suggested for children over age 7, but with close parental supervision, it worked well. Of course, now the hard job is keeping them away from the baby, but that's a constant challenge when you have two older kids.
My daughter and son both made one bracelet for themselves and one to give away (most likely as a birthday gift to the girls who gave them the shrinky dinks...is that lame?) The set also comes with accessories to create hair clips, cell phone charms, magnets, and necklaces. It's nice to pull a ready-to-go project out of a box once in a while instead of creating, gathering/preparing the supplies myself.
I think it would be fun to create their own shrinky dinks, too, with blank shrinky sheets. Sometime.