Puzzles are another great language activity to do with toddler's. My favorite's are made by Melissa & Doug, check them out at http://www.melissaanddoug.com/. Melissa & Doug make colorful wooden puzzles that range from easy 3-piece to difficult multi-piece puzzles and they come in common themes like barn animals, shapes and transportation (these three are lying on my living room floor right now!). Melissa & Doug products are available from a wide range of stores, but a Canadian online store that I'm loving right now is http://www.cooltoysfortots.ca/.
Puzzles are great for introducing common vocabulary to your toddler, they're also great for teaching concepts like 'in' and 'out'. Become the keeper of the pieces so that your toddler has to interact with you to get each piece and be sure to take a few turns yourself to model the words and concepts. Aside from their communication benefits, puzzles are great for developing fine motor skills as well!