We love to make the cake time into an activity because it takes up more time and the kids have a ball with it.
Last year I made chocolate zucchini cupcakes (they are soooo delish) with cream cheese frosting in three colors. We don't do artificial anything if we can help it so we used turmeric for yellow (leave it out for a few days and it loses most of the flavor), blueberries for purple, and strawberries for pink. We got some nuts, Sundrops, fruit, coconut, and Yummy Earth lollies. While the kids were playing we set up each plate with a cupcake (take off the liner!), a dollop of each frosting, a bit of all the toppings, and a popsicle stick for the frosting.
They have a ball with this!! You can still have the main cake for singing and eating but the decorate your own are messy, fun, and yumm!!!
We have done this activity ever year since our daughter was two. Until she was four, we put a table cloth on the floor and had them sit on that. Hand out wet wipes to parents so they can be ready for the post-decoration wipe down!
Have fun planning and celebrating! :)