I grew up in Berkeley, California in the 1970s. You know what that means: whole wheat birthday cakes made with organic flour, unfiltered fruit juice, brown rice, hand-knit sweaters ... and wooden toys.
While definitely not a hippie myself, I do have a soft spot for pretty wooden toys, and try to buy my child things that are made by actual human hands with natural materials. Here are a few especially nice items I've seen, all of which are ostensibly made for kids, but which would be appreciated by any adult with taste and an interest in the hand-made.
I loved these as a kid. They're incredibly cheap - $6 for a pack of 50 - but you can build the most incredible, intricate sculptures out of them, from model skyscrapers to full-on Buckyballs:

This pretty mushroom puzzle would be best accompanied by a lesson to teach kids how to spore-print, so that they'll never accidentally eat anything that might hurt them:
These "pet monster" blocks are unfortunately sold out (on Etsy, a treasure-trove of handmade toys):
Etsy seller Deepoca has these four vintage pieces of wooden fruit - a banana, pear, apple and starfruit - for only $12 for the set:
Ulf Hanses designed this 5.25-inch-long Playsam Streamliner wooden car; FitzSu Los Angeles carries them for $46.

Simus the wooden rhinocerous, designed by David Weeks in the style of the great Danish designer Kay Bojesen, is just one of several articulated wooden animals carried by the same company:
Fine Wooden Toys carries this very cool stacking/nesting "furniture house," which can also be a balancing toy, a tunnel-builder, or any one of a dozen other open-ended play items:
The same company sells this cool and colorful German-made magnetic wooden Indian Square puzzle:

They also have this wonderful fully-furnished ready-to-paint (or wallpaper) dollhouse for $90. I bought one for my daughter before she was born and she gets an enormous amount of use out of it:
Eric Carle was one of my favorite authors as a child and should be well-known to your kids, too; I was happy to discover that the Eric Carle Museum has a number of well-made toys based on his stories, including this very pretty (and very hungry) 12" long caterpillar pull-toy:
Etsy maker/seller Imaginationkids has a number of pretty, sturdy, and brightly-colored stacking, rolling and other sorts of toys (all of which function just as well as desk sculpture for grownups) at extremely fair prices:
Ikea's very cool Lillabo vehicles are $10 for a pack of three, and are only available in some of their stores. And while I always prefer to buy from makers themselves, Ikea does carry a number of really sturdy wooden toys.
Chicago's Agent Gallery has the 28" tall Mr. Wood, below, currently on sale for an undisclosed sum (if you have to ask, etc.):
Blackwagon is a "modern boutique for babies and kids," and carries lots of neat wooden toys, like this cool spinning top:
These pretty Scots-made wooden rattles are £30 from Papa Stour:
Wolfgang Sirch's Max Pushcar is one of several designs made by the Sirch family, who have been designing and making wooden objects for more than 300 years in their native Germany:

You may think the timing of this piece is a bit off - after all, the traditional holiday gift-giving season just ended with 2010. However, kids appreciate beautiful, educational, well-made gifts any time of year, and maybe you'll get some good ideas from the items I've shown above.