Duck, duck, goose! We played it at my daughter's party last month and it was hilarious.
Also, if you have a semi-talented teenager or parent around, you can do face painting. The kids got a big kick out of having their faces painted. Most of the little girls were painted as butterflies and it was so cute.
Last but not least, dress-up is always fun. Even for boys. (Have a pirate hat or two handy)
For food at my daughter's party, we had some pig-in-a-blankets and those were a HUGE hit. Then to attempt to balance things out, we had some raw veggies with ranch dip. We had cupcakes instead of a large cake, and that made it much easier to serve (no plates necessary, just napkins!). I went to a party for a two year old recently where the mom gave each child their cupcake, set out some frosting with butter knives, and let them frost their own cupcakes and then add sprinkles or whatever on top. It was a mess but the kids loved it.
Have fun at your little ones' birthday party!