We started our girls out with a handed down Game Boy from their cousins, when they were 3 and 5 years old. It was a perfect intro without spending a fortune. They have now upgraded to Nintendo DS and love them and you will find a lot of games for them. However, as someone else pointed out those aren't usually educational.
I have heard a lot of good about the Leapsters, but we don't have one ourselves. They are pretty educational and fun.
We do have a Nook Color and you can dowload apps on to it to play. Our girls love that. A lot of the apps are educational and much cheaper than buying video games. You also have the added bonus of being able to use it for reading books and for that age, Barnes and Noble has a lot of "interactive" books as well. If we had to choose only one device at our house I think we would choose the Nook. It would probably be the most smilar to your Ipad without spending that much money.