I ran across this really cool idea of a bike that grows with you. It starts as a walking bike to teach the kids balance. Then, you can reassemble it to make a regular toddler bike with peddles. Check out the article and pictures:
Engadget: As your kid grows, this bike will transform to fit them
So, the bike handle the kids physical changes, but what about their emotional changes? The bike needs Elmo or Veggietale decorations. As the kids get older, you need to be able to switch that out for Spiderman or Barbie!