You can make a very plain shape look gorgeous with very nice material. Dupioni silk is beautiful and not too difficult to sew with, but it does unravel easily. If you feel you can handle it (zigzag your seams or something as you go) then that would be my choice. Otherwise, I would honestly pick out a nice quilting cotton from a collection that you really like and make a simple dress and add lace trim and a big ribbon belt to it.
There are lots of ways to use lace to trim a toddler dress. Here are two of the easiest:
1. zigzag the bottom of the skirt (or just cheat and cut it on the selvage), then zig zag or straight stitch on some lace on the edge. You can do the same thing on cuffs
2. lay a piece across the bodice, either horizontally or vertically, and use a narrow zigzag on each side to hold it down. And as many pieces as you want. You can make "stripes" vertically up the front, or make a starburst pattern. Don't even worry about cutting away the material behind it, just make a design and stitch it down.
If you want a simple pattern to embellish, Simplicity has some decent ones.
* Simplicity 4246 is very easy if you leave off the collar
* Jumper in Simplicity 5936 makes a great little sleeveless dress- you could put a sweater over it or a nice shirt under if it will be cold out
* Burda 9885 is a bit trickier but super cute with a lace hem
http://www.burdafashion.com/en/Patterns/Kids_Collection/9885_Dress_and_top/1270778-1129000-1005022.html