How about
Ratchet & Clank or its sequel? The former was included with my recent PS2 purchase and to my surprise, really is quite fun

It's
very bright and colourful visually (just in case you thought I meant in terms of language...

) and I can imagine younger children finding it fun just 'walking around' the environments. I've seen my youngest niece and friend's daughter do the same on occasion with
Munch's Oddysee on the Xbox, and I'm sure they'd enjoy R&C rather more.
It shouldn't be forgotten that there's hundreds of
PlayStation games compatible with the PS2 and plenty of them that still exude great gameplay - along with often being cheap.
As you've mentioned dancing, perhaps you'd consider one of the dancing titles available on PS2 and PS formats? Add a mat or two and I reckon the kids'll be busy for a while... if they can get Granny off 'em!
I think my friend bought a Barbie game for his daughter too, so although I can tell you nothing of it and don't even know what genre of game it is (besides 'pink'), perhaps there's a possibility.
I'll return if I think of any titles, but perhaps the easy thing would be just to pick a topic (cars, cartoon etc.) and browse the shelves? One thing about the two Sony consoles is that there's almost certainly a game (or
range of games!) available for any genre or subject you'd care to chose.