Magnatiles. http://www.youtube.com/watch?v=e1Jj-PYBtLo Let me put it this way, if I didn't buy them 2 Christmases ago when my littlest one was 5, I would have bought it last year when she was 6 and will still buy them this year. This is my top toy choice. My daughter has built rockets, a boot, crates for her animals, camp sites, houses, multiple story buildings, etc. I have used it to explain over, under, in, on and besides (she has language issues). I have used it to explain fractions to my eldest. Best part...no batteries, easy to store and still perfect for play if you loose a piece or two. Easy to store. Loved it so much that I donated a set for my kids classroom. It was a hit.
Other suggestions
Magformers http://www.youtube.com/watch?v=Cx4D8Z-2vSc (very similar to magna tiles.We have both. With these it is easier to pick up 3d forms. You can make a sphere and some sets come with wheels). Easy to store.
Make do http://www.youtube.com/watch?v=XUTyugtAWDo (we have built tunnels and playhouses with these using carboard boxes) They are reusable and very storage friendly.
Schleich figures (animals, dinosaurs, mystical creatures)