I went to 'Tales' this morning at the Chicken Shed Theatre in Southgate (click on 'Tales form the Shed' in the left hand pane) and dd just loved it.
The children can speak, move, run onto the stage etc. and it's integrated into the interactive performance (it works better than it sounds like it might, LOL). I think they have a variety of characters, stories etc. and they also had two musicians accompanying the singing / dancing / performing side of stuff.
It was fantastic. dd (15 months) is not yet walking but had a good bounce and the atmosphere was magical. I'd highly recommend this to anyone who can get there with a young child.
I don't really know very much about the Chicken Shed but it's an 'inclusive' theatre. You can read more about the company here .