Our DS turns 3 on the 18th! What works for us is talking, talking, talking about what is next: what we'll do after the show/ride/whatever, what character he wants to try to find, what he will say to said character...that sort of thing. But he's a big talker (to US, he always gets shy around the characters!), and even at home he is constantly wanting to talk about our next trip to WDW.
One other thing we've done (and are still working on) is buy a t-shirt with a large number of characters on it. Buy an embroidery hoop and a fabric marker, and have characters sign the shirt. We've gotten lots of compliments on it, and it's DS' favorite shirt to wear (when it's warm enough!). We still need Daisy and Jiminy Cricket; hoping to find them in February. In December, we lucked up on Cinderella, Prince Charming, Aurora and Prince Phillip (DS' favorite). The girls had signed in September, so I handed the shirt to Prince Charming and said, Please sign this shirt, if you can find room; I'm afraid Cinderella signed really BIG the last time we saw her! They all thought that was hilarious, and Aurora and Phillip came over to see just how BIG her signature was. The more talking you do to the characters, especially the face characters, the more great interaction you'll get. And be warned: your DS may be terrified of the characters!
Have fun, maybe we'll pass one another at the parks!