You've gotten lots of great suggestions. All 3 of mine had various language/speech issues, and my youngest was severely language delayed. We started speech therapy and OT for small motor around 20 months - the waiting for the approval is brutal! We finally started the speech by paying out of pocket - which sucked.
His main issue wasn't forming the words as much as de-tangling the sounds - sort of like audio dyslexia - it's called auditory processing disorder. He also had problems with sequencing - both figuring out the order of sounds in words and the kind of sequencing required to follow directions. His speech therapist used simple puzzles where you put a simple picture story in order to help with that - our local toy store had a bunch and repeating the same puzzles over and over helps.
She also had us read to him a lot. Simple picture books with easy to follow stories and words - my guy loved the Tom and Pippo books (http://www.amazon.com/s/?ie=UTF8&keywords=tom+and+pip...)
She had us read the words, but also point to and discuss the story and what's going on in each page. Again, speech delay has many pieces - not just the word forming, articulation part.
We did several years of speech therapy and Montessori school thru kindergarten. He's now in 5th grade and is an absolute chatter box - really! And he has a HUGE vocabulary. He's learned that he doesn't always hear whether a word has a "buh" or a "kuh" in it and has learned to ask or check - Montessori really helped with that.
Early intervention can be really draining on all involved, but it really made a world of difference for my guy! Hang in there :-)