When I was looking for Colorforms at my local toy store, I was told that instead of Colorforms, they carried Imaginetics Magnetic Play Sets. I can't really compare and contrast these with Colorforms because we don't own Colorforms yet. However, I will say that DS has had a lot of fun with the Imaginetics. They are listed for ages 3 and up and some of the sets do have small magnets that would be a choking hazard. However, the Mr. and Mrs. Potato Head set, although technically for 3 and up has no tiny pieces. The smallest piece is probably 1.25 x 2.5". Anyway, DS has a lot of fun putting the magnets on the board, taking them off and dressing Mr. and Mrs. Potato Head.
http://www.intplay.com/activity.htm