Well, I've got a couple good ideas for SMS toys:
A Mario doll complete with detatchable FLUDD pack. You can actually fill it with water, and collect other toys. Such as Bowser, Yoshi, Peach, locals, toads, etc.
And picture this: A water gun just like the FLUDD. Fill it up with water, strap it to your back, and have an awsome water fight.
And picture this: SMS on GameBoy Advance. Mario squirting in 2D!