Harmonicas, colorful ukuleles, percussion instruments shaped like fruit, a fun keyboard instrument - there are infinite possibilities for great Christmas presents waiting at the music counter.
Toddlers are not going to have the coordination to really be able to play an instrument but they will love to make a noise on any kind of percussion instrument and there is a wide range of fun shapes to be found, especially in the shaker and small drum department.
Some children of this age may show may show real aptitude for music and this should be encouraged, but almost all children will enjoy a gift with a musical slant. Many of the gift ideas for toddlers will still apply to this age group. Their increased hand/eye coordination and general physical capabilities simply mean they can do more with a musical gift than they could before.
Everything suggested here is readily available on the internet but it is sometimes more fun to Christmas shop for musical gifts at the local music store.