Henry recently had a photo shoot and I tried to pay attention to see if there were any techniques our photographer used, besides just being generally awesome, that I might employ later on. Turns out she's noticed toddlers can be a bit dodgy when it comes to posing. But one thing you can do to stop 'em in their tracks is to ask if there's a <insert item here> in the camera lens. I've been doing this with Henry a lot since then. "Hey, Henry? Is there a dinosaur in there?" This makes him do two things that are rather helpful - come close enough to look for a dinosaur in the lens and stand still for a millisecond. But sometimes I still like to catch him when he's just doing general boy stuff, like tinkering with toys.
I also noticed that iPhoto has a retouch option in editing. Henry happened to have a bloody nose last night, he gets these a lot, and had a bit of dried blood on his nose. The retouch wand didn't do as good a job as I'm sure you could do in a program like Photoshop Elements but it did the job well enough.