In preschool settings or with young children at home, give them plenty of time for free play. Avoid what I call close-ended toys – those that only work for a single purpose. These include action figures and television-themed characters. While some imaginative play is possible with these, they do not lend themselves to a child's own inspiration as well as simple dolls, figures and wooden playsets.
Sometimes what kids need is a lack of toys. Give them a basket and the freedom to collect natural items. You'll be surprised how these items work their way into the child's play. Non-toy items, like old dishes, tools and other common household items also become brave new worlds in a child's hands.
Finally, encourage the child to find their own solutions in play. For example, my son wanted a toy airport set. The price was out of our range and no major gifting holidays were near. He used boxes, paper tubes and construction paper to create his own set with a little help. Unlike the store bought version, though, he was inspired to add more. Soon he had an entire airport and launchpad, plus satellite sets he created to simulate similar structures on the moon, Mars and beyond. Truthfully with children, less is often more.