My 3 1/2 year old loves anything arts and crafts (water colors, kid scissors, tape, markers, glitter, glue stick/glue). She also love the Easy Bake Oven, sewing cards and puzzles. She spends countless hours playing CDs and dancing in her room (so a cd, cd player, and play high heel shoes)!
Re: Best toys for 3.5?
Trains! We are getting DS the polar express train set. Also, he is really into superheros. Board Games! Cat in the Hat-I can do it, is a great game.