Unwilling to purchase an iPod + docking station for two kids under 5 years old, we've been through A LOT of Clock Radios for both the Bear and the Mouse. They've all broken down in some form or fashion: stopped playing CD-Rs (which is what we use mostly, making mixes for dancing/sleeping/etc), clock getting stuck with a faded, blinking 12:00, and other maladies that have all ended with a radio in the trash. In general we have dealt with more than our fair share of poorly made products.
The best of the bunch, in performance and price, has been the Sony Dream Machine. The newest version of the Sony Dream Machine offers a sleek design with large, easy to manage buttons affording kids the independence they often desire as they work the controls themselves. In addition to playing our CD-Rs, it also has an iPod input in the front and comes complete with a little white jack for it.
We have two Dream Machines now. One has been in use for 9 months or so and the other for about 3 months. Both continue to work well despite relatively heavy use and being mostly kid-controlled. Not bad for a device priced under $40.