my kids are a little older but netflix seems to have plenty for the kiddos (ours are 6 and 8)
looks like olivia is only on DVD, but backyardagins, caillou, blues clues, dora, diego, wonder pets, super why etc all are...
but for that age DVD's are prob the best way to go... or even VHS (goto goodwill or other 2nd hand stores) and you could easily find them for next to nothing...
we dumped cable a month or 2 ago... most everything we watch we can catch on hulu... and what I can't it's easy enough to find online... we use netflix streaming for just random watching (been watching though the wonder years the last few days lol) always something you can watch if you want to waste some time... and for DVD's we now use blockbuster (when they mail a vid to you and your done with it run to blockbuster and exchange them for a movie at the store... then return and they'll send you more dvds)... seems to work pretty well for us... and we see A LOT less commercials and pay a lot less then we did with cable.
also plan to get a decent antenna here soon... should give us about 10-15 local stations if I get a decent antenna... all for less then the cost of what we where paying in cable