You know that awful scratchy carpet that is on the bottom half of the walls of every LDS church building in the world? This carpet hold up felt pieces like magic at just the right height for nursery kids.
In our nursery we keep a little bag of felt pieces in different shapes and colors. The littlest ones just like putting them up, rearranging, hoarding etc. The older ones like sorting, or naming the shapes and colors or making scenes on the wall with the felt.
I've also had good experiences with using felt glued to the back of pictures to hold up illustrations for lessons. I have a bag of animal pictures with felt glued to the back that is very very popular among the nursery kids.
This same idea also works on some pews for quiet fun during sacrament meeting.