I have two young children (ages 3 and 5). When I am cooking dinner I like to have them in the kitchen with me.
To keep them busy and out of each other's hair, I designated a cupboard as their "activity center." I asked for their help in designing the space. They told me the types of things they would like to have there and I determined how much of each category and what containers were appropriate. Getting them involved in the design gave them ownership of the space and I have found that they are more likely to return items back to their proper places when I do involve them.
On the top shelf, I used a magazine holder on its size to contain stickers (in a plastic pouch) and a folder for completed artwork they decide to keep. On the horizontal trays we have loose colored paper/construction paper and coloring books. My oldest daughter's journal is next to the horizontal trays on the right.
We have crayons, markers, and colored pencils in containers on the lower shelf. (My oldest wanted them separated by type.....like mother, like daughter.) I used another magazine holder for educational workbooks on the right. These are strategically placed somewhat out of view so the kids aren't using them as coloring books. (These types of workbooks are more for one-on-one time with me.)
This system has been working quite well. As the kids get older and their interests change, so will this space. For now we are enjoying cooking time bliss.