I've been wanting a prayer routine in my home for quite some time and only recently have I gotten any traction on this. I'm not currently aware of any good resources for praying with small children.
During Lent, we started praying an (abbreviated) Rosary with our Carol (3) and Anna (1.5) before bed. How much? A single mystery, with the usual material before and after it. We used a "Scriptural Rosary" book. Carol jumps in half-way through the "Our Father" and the "Hail Mary". At the end of each Hail Mary, Carol puts an cross into a basket. Anna squirms in my lap and occasionally says "Alleluia!"
Lent was somewhat tragic for us. We lost a(nother) baby to miscarriage, lost our prayer momentum, and didn't recover it until Easter. Now we pray two mysteries instead of one, and use another "Scriptural Rosary" book that is a little more kid-friendly. It has better pictures and each of the Hail-Mary thoughts is a simple paraphrase of scripture rather than a direct quotation. Instead of saying the Salve Regina, we sing another Marian antiphon that we actually know: Regina Caeli. When we're short on time, we telescope this whole thing down to an Our Father with simple intercessions.
We've also started praying more consistently before I leave for work in the morning. Historically, this has been as simple as an Our Father with intercessions, but we've started chanting "Lord, open my lips" followed by Psalm 95. (Tones from "Christian Prayer".) Perhaps you can see where this is going: a family prayer routine based on the Liturgy of the Hours.
How much actual prayer takes place with children this small? I have no idea. At least they are hearing the words repeated over and over again. At least they will see Mommy and Daddy taking time out of their day to pray with them in their earliest memories. And I'm finding that I'm actually able to pray despite the toddler squirming in my lap, and sometimes the slower pace helps me to pray better that I might pray in "ideal" circumstances.