We do alot of long distance driving with our 2 year old daughter and one of the best things we've found have been books. She can't read but she's very happy to look at the pictures and make up her own stories.
We've also got a bag of toys that are only for the car so she doesn't get bored playing with them everyday. We hand them to her one at a time as she gets bored.
The CD idea is a great one if you can handle hearing the same stuff over and over but it's easier to listen to than a whinging kid.
We used to have a magnadoodle for her aswell but unless your child knows how to use it properly (clear the screen to start again) then they may need your help and that can be abit painful.
I definitely recommend books though. Especially ones about characters they're familiar with. Friends tell me that if you can afford it a DVD player in the back is a winner too but we haven't got that desperate, yet.........
Jen, Qld, 06/03 girl & 04/05 boy