Action songs are great.

Puppets can be good too, just make sure that they the puppets are non-threatening - large puppets can be frightening for little ones. I took along some lovely puppets to a nursery volunteer session and found that one of the larger ones (a beautiful bird with movable mouth) really scared one small boy. I stopped taking that particular puppet along with me. If you use puppets make sure they are hard-wearing and allow the children to handle them. Small children can be very grabby (speaking from personal experience there!!!).

One storyteller I saw had a collection of small toy farm animals under a cloth. He invited the children to come up and choose an animal or two and then told a story round the animals that they had chosen.

Riddles are fun but I suspect these children may well be too young to really work with them.

If your host is having balloons at the party ask for them to kept away from the storytelling as squeaky balloons (they squeak when you touch them) are noisy and intensely irritating for someone trying to tell a story. I saw one very experienced storyteller being driven to distraction by noisy balloons at a Fun Day (not much fun for him!!). So every so often he would get up and grab a balloon and put it right beside him saying in a jolly voice, "I'll just put your precious thing here for safe-keeping."

I hope the gig goes well.