Gayatri: I was a former music and movement specialist of 12 years. Wrist ribbons are a favorite of the kids, accompanied by a Putumayo Playground CD song. "Free dance" is so much fun and helps the kids express their personalities and develop a movement vocabulary of their own. Simple, easy, and fun for you too! My website, Littlelovees.com, was developed to help find resources for all things musical for kids. Check it out! No annoying kids music there!
Hi! Some great resources for dance-able children's music would be found at http://www.zooglobble.com and http://www.bestchildrensmusic.com. I think you'd find music from Justin Roberts, Bill Harley, Charity and the JAMband, anything from Little Monster Records, and Baby Loves Music are also great choices. Parents' Choice and the NAPPA Awards find great music picks each year for children... both good resources for finding new material.
A new artist, who is an accomplished jazz clarinetist, is launching a Timbalooloo music education that involves music and movement. You can find out more at: http://www.oranetkin.com/wakeupclarinet.htm