Definitely the Magic House. They have added this new area just for little ones and it is really fantastic! It caters to the 3-6 crowd, lol.

The City Museum, on the other hand, seems geared towards school age children, almost exclusively. It is one of the neatest places I've ever seen...from an artistic standpoint..but it was sortof scary to have my little ones in there. It is comprised mostly of these huge overhead tunnels that the kids climb around in. Since my daughter was 3 at the time that we went also, I would not let her climb in there alone so I had to go in with her. I was afraid she'd get lost and not know how to get out, plus they are pretty vast...covering the ceiling of a building that is just massive. So there would have been no way of me knowing exactly where she was in the tunnels..too many kids to keep track of her accurately. So in I went.
The smell of stinky kids' feet was overpowering.
So unless you are amenable to climbing through miles of tunnels with rude shoving children who are barging over your precious D3, I'd steer clear!

There were of course lots of other things to do there but that was a big draw and my daughter couldn't stop asking to go in.

The Magic house built this area in their lower level that has a play grocery store, pizza restaurant, post office, etc. A tiny town, if you will. And the grocery store has a real basket and they 'shop' through the store and pick up what they need, checkout at the register, etc. It is so cute and it is all the kids' doing it..there are no adults playing the role of "cashier" that would ruin the experience, lol. It is hard to explain but very very cute. Also they have an excellent crafts area where the little ones get to get a piece of paper and go to town with it..glue, feathers, glitter, paint, etc. That was a big hit too.

Enjoy your time, whereever you decide to go!

Cheers,
Honey and babe