Get an indestructible plastic one that is nice and big for multiple kids to ride and for lots of stuff, so you can take it to places, load it up, and haul a bunch of things easily. We had a metal wagon, it was outside, since we had no other place for it....needless to say, it rusted. Also, is was soooo heavy that we couldn't throw it in the back of the car/van very easily either. I was always so jealous of the folks with the nice wide, heavy plastic ones (with the little dorr in the back so you didn't have your kid climbing over the top of it) that would swivel around so simply, quietly and easily through crowds etc. Ours rattled (even before the rust came), was HEAVY, and didn't have the nice tall sides that the plastic ones had. I was always losing stuff out of the back and was always fearful my daughter would fall asleep and would tumble out of it. It was a beautiful radio flyer wagon, and it was the really large sized one, but it was a nightmare to really use. It ended up being my child's for her to load up with rocks, dirt, bugs, etc.
Almost forgot! You wanted gift ideas, too...
I think my daughter had more fun with a simple cuddle-soft baby doll. It was small for her hands and she took it everywhere. It is called a "DIMPLE DOLL"...the catalog Hearthsong has them as well as toy stores (not walmart or department stores). I found a like for you to try its:
http://www.hearthsong.com/hearthsong/product.do?section_i...
Good Luck!
Jen