Definitely Start the Party (the original probably even more so than Part 2) - you can't go wrong with this one. Everyone always loves it, and while some mini-games can be a bit too tricky, most of them are universally loved, and you can always pick a few that even a 3yo enjoys (most notably the fly-swatting one is a huge hit).
For Carnival Island, you should have them try the demo at least. It's quite fun. Dance games are also a good idea generally. My son loves DanceStar Party, but I'm sure Just Dance 3 is also a good choice (though I haven't tried the PS3 version of that yet, just the Wii version at my niece). Beat Sketcher is also decent, you can also try the demo for that one, but as mentioned it will likely require an adult being present for the kids to enjoy it, though from 6-7 years old I've noticed kids can really play around with it by themselves. The full game has a bunch of 'color-book' style pre-sets that you can paint over, which helps a lot making it more fun for smaller kids.
Finally, Singstar is also very popular with kids, partly because it's supported the camera since day one, but also if you have access to a version that is tailored to kids. I don't know if there's one for you in that respect but we have a big studio for childrens programmes, and they've released one that contains most of the popular songs from their shows with videoclips, and my son loves that one.
Not a Move game, but check out the co-op playable platformer Tales from Space: About a Blob. That one appeals a lot in style. It gets too hard for a 3yo quite fast, but if the 5yo or an adult carries the game, even the 3yo may enjoy himself. But my son also loves just watching me play the game. Same for the nice and colorful Joe Danger, which he also plays himself, and he's getting half-decent at it.
And of course Rayman: Origins is also not a Move game, but absolutely fantastic. My son loves it, and it's also very forgiving, at least the first few worlds, when you are playing co-op.
These are just the things I've currently been playing with my son. I'm probably forgetting something here and there, if I think of something I'll check back in. But if you get just one title, I'd say get Start the Party.
EDIT: Da Blob 2 has some Mario Galaxy style co-op options, with the difference that one player can play with navcon/controller and Move, and the second player can grab a second Move controller to do some point-and-click interactions, which worked quite well with my son too.