I feel DD's old enough to get her head around it now - she's 3.2. But what to say? How on earth do you get them to understand it's only for emergencies?
She's just rather brilliantly told a sales caller where to go: Can I speak to your Mummy or Daddy, please? DD: No, I have to go and finish my Weetabix now. Bye! 
So yes, she LOVES the phone.