I have, in the past, babbled on regarding the need for artists to improve their album art and overall packaging.
Why? Because unlike many other genres of music, children's music is still very much reliant on physical modes of distribution and, as a result, the physical products counts, and far more than just about any genre.
Children's music publicist/all-around-good-person Beth Blenz Clucas' recent newsletter offers the thoughts of some of her clients on this very issue. It's worth a read, and not just because it agrees with my world view. There are some very good reasons given for why actual CDs won't go away, but one of my favorite has to do with cassettes. A couple people make the comment that cassettes, which I would guess many of us haven't purchased a cassette since, oh, buying that Erasure "A Little Respect" cassingle, took forever to go away in the kids' music industry. It's a technologically lagging genre. That does not indicate the dominance of downloads any time soon.
Frankly, because the parents are buying this music, not their 3-year-olds, and because the parents who are interested in this music grew up in a time before downloading, we're still comfortable with the physical product. Don't get me wrong, we still get music from iTunes and eMusic and elsewhere, but we like the physical product, too. We like to give the physical product to friends when they're having kids, and to the kids themselves at the birthday party. Face it, it's hard to wrap a download.
I realize that eventually CDs will go away even in the kids' music genre, but it won't really start taking hold until our 6- and 10-year-olds, who will have grown up in a downloading world, become parents themselves. And even then, their parents will still give their grandkids physical CDs.
(For whatever it's worth, here are more of my thoughts on 21st century kids music.)