I agree with Cindy.  My son was 2 when he went through the same thing.  He thought it was soooo cool that he could make his penis "dance".  (Sorry if that offends anyone but it shows the innocence in his actions.

Later, when he was 5, he became grossly under suppressed and he would have erections all the time.  The difference was that he was preoccupied with it and wanted to be alone.  He crawled under the kitchen table and was looking at my J.C. Penny catalog in the swim section.  I won’t go on, but he had hormones going on that were sending him into early puberty and instead of feeling innocent he felt he should hide the feelings it gave him.  He was not happy during this time but rather he was frustrated and a bit ashamed.

You should be able to tell the difference.  The only thing that worries me is that when I tried to tell everyone about his behavior when he was 5, I was told that it was "normal" for a little boy.  I couldn’t seem to get across the difference of when he was 2 and when he was 5.  Because of this he went on unchecked for months.

For this reason I will add that you should know what your child’s levels are.  They should still be in a "normal" range.  My son’s were normal when he was 2 but when he was 5, and they finally ran them, his OHP levels were over 35,000!!!!

Just stay involved in all of this and you should do just fine.  Enjoy his innocence and have a Happy Holiday.