I'm in the process of designing a calculator toy.  What are the
features that a good educational toy for children 5 to 10 should have?

Thnak you

The absolutely most important thing is that it has to be a toy - it
has to be interesting to play with. If you are trying to teach them
math, you have to hide the math in a game. For example, it might be an
adventure game and they have to solve math-based puzzles to get past
certain stages.

The age range you mentioned covers a broad range of knowledge, from
none to a fair bit potentially. As such, the game shuold scale the
difficulty of the puzzles/questions to the level of the player. There
could be different difficulty settings, but they shuold go along with
different games or there will be no incentive to play again at the
harder level.

What about a set of wooden or plastic rods, square in dimension, of
different unit lengths, marked and numbered.  The youngest kids would
start just using them as blocks, but quickly discover that a 2 unit
and a 3 unit rod are together the same length as a 5 unit rod, and so
on, might discover that the 3, 4 and 5 unit rods form a right
triangle.  Maybe you could add later rods with an additional 1/2 unit,
also maybe with the 1/2 unit the length of a full unit but cut
diagonally so that the end overlapped the end of a similar rod with
such a 1/2 unit.
This would introduce the concept of mass:  why the sloped 1/2 unit,
although as long as a full unit, only counts as a 1/2 unit.

(Hmmm, another project, should I become a grandfather.  The other one
is a set of blocks to construct an arch.  :)

Maybe the toy can lead to playing with Napier's Bones and learning
much more about calculating.
http://www.macs.hw.ac.uk/~greg/calculators/napier/about.html

I never thought put myself as that young. So I don't know what visual
and tangible toys the kids would crave to play with. But I could
suggest a few things.

1. Do you know the first mechanical calculator was built by Pascal? He
utilized the differences in rotational speed of gears. In the little
display windows, numbers appear for each digit. That type of
mechanical model may give kids the sense of increments in each digits.
That is, in our world, left most digist increases the slowest.
2. Prepare a board on which many geometrical figure is drawn and
pieces of basic figures like triangles and rectangles. By trials and
errors, allow kids to fit the pieces on the boards. Unlike jigsaw
puzzle figures can overlap to increase the recognition of shapes;
there could be a square inside rectangle; there could be triangles in
parallelogram; there could be set of triangles in hexagon...
3. To prepare for summation of many digits, they need to learn how to
put 1 (10) to next higher digit. How about using set of tubes (9 tubes
if the sum is two 3-digit numbers, because the answer will also have
at least three digits) and prepare discs representing 1 for each. As
they adding the numbers of disc in tubes, they may find tubes cannot
contain discs any more. Then they can exchange the one full of tube
with different color of a disc (which is going to represent the next
higher digit number)

(...I'm exhausted of answering Google Answers now lol)

You may want to take a look at TI's "Little Professor" and LeapFrog's
"Turbo Twist" games for some ideas that seem to have been successful
in the past.

Shorter games will hold a younger child's attention better. There
should also be some (relatively) immediate reward system. The younger
the child, the less that should be required to receive a reward. You
may want to consider sounds and flashing or dancing images as a bonus
for correct answers. You could have more complex rewards for several
correct answers in a row.