The question of how to prepare a young toddler for a new sibling came up in one of my mom's groups recently. One of the major pros to siblings close in age, is less of the traditional "sibling rivalry" you might find with those who grow up farther apart in age. Do I have any scientific data to back me up? Nope, but ask around and you'll find out.
When my daughter was born, my son was almost 16 months. His world consisted of his parents, his lovey, one nighttime bottle--I neglected to get rid of prior to baby, and a handful of favorite books/toys. His location didn't even matter since we were home from our overseas tour for three months and living in three different locations.
Enter baby #2. She was fun to poke and try and step on. It was fun to run up while she was sleeping in the swing and scare the crap out of her so she'd cry. Sometimes in the car, it was fun to throw things at her or scream so she'd scream. (Though I'm pretty sure my son figured out very quickly this was not a good tactic since he couldn't run away from her ear-piercing cries.)
We did little to prepare Alex for his baby sister. We had a few books about it, but he was really too young to 'get it.' Though he did enjoy trying to climb to the top of Mt. Pregnant Belly for a while.
For many months, Alex didn't care whether Anna was in the room or not. She was just another extension to his mini-world--one that cried an awful lot. Then she started crawling and the real fun began.
Tip: Do what you can, when you can, to educate your toddler about the impending arrival. Books and talking about the baby will help. In the end probably nothing will ever prepare your toddler--or you--for the changes that will occur.