My daughter just turned 2 on May 8th. I was determined that the binky was going to go bye-bye by the age of two. However, at the point she turned 2 she was down to only having the binky at bed time and during naps on the weekend. When she was about 18-months old I stopped sending the binky with her during the day to the babysitters house so this made the "big transition" easier.
So a couple of weeks ago I decided that now was the time and I needed/wanted to do something. So I decided to have a bye-bye binky week. The week before I started I told my daughter every day that she was a big girl and really didn't need that binky anymore. So, in the morning as soon as she woke up I would take the binky and put it away.
She is all about princesses, Tinkerbell and Shrek right now. So, the following week I went and bought her some crayons and a coloring book. When I picked her up at daycare I started talking to her about how she is a big her and doesn't need the binky anymore. I told her what I bought for her and that we were going to go home and color and envelope for Princess Fiona. I said that we were going to decorate the envelope and send her binky to Princess Fiona and Shrek because baby Shrek needed it. She was excited about going home and working on the project together.
When we got home we ate dinner and then colored the envelope together. We walked to the mailbox and I let her see me put the binky in the envelope (I think that was her aw man moment because she had a look on her face like "hey, what are you doing") and while I was putting the binky in the envelope I was explaining to her again that baby shrek needed it. I let her put the envelope in the mailbox by herself and close the box. When we got home we colored in her new coloring book. At bedtime that night, she asked about her binky and we talked about the evening and that the binky went bye-bye to shreks house.
She asked about it the next night and by the third night she was not asking for it at all and hasn't asked about it since. I know it sounds a little silly but it worked and believe it or not she actually sleeps much better. She is not waking up off and on during the night looking for her binky anymore and, in turn, mommy is getting more sleep too. She is much more rested and alert in the morning now and still happy as ever.
The biggest advice I could give: What ever way you decide to get rid of it you must be comitted to the change. Do not give in no matter what! If you give in one time then it will twice as hard to make the transition.