What small engine and short cars to buy?

For rolling stock, Menards has a good selection of very affordable traditional sized cars. Lionel LionChief Plus locomotives are hard to beat. If you can deal with Conventional operation, Williams by Bachmann are another good choice.

I like Lionel's post-war type Vulcan switchers.  #41 and 51 Army and Navy switchers.  These have the original mechanical E-units.  

Another excellent small switcher is the RMT Beep.  It has the electronic E-Unit.  

RMT also makes the Peep, a short single truck passenger car.

Lionel has the field type freight cars.  They go very well with the locos I mentioned above. 

And the Peeps.

Lionel's newer release of the post-war Army and Navy switchers may have electronic E-Units.  However, don't quote me.  

For mining operations, look for the short ore cars.

K-line Plymouth engines are very nice. They are conventional only but have great smoke units. Some short ore cars would go nicely with the engine. Lot's of different road names available too.

The RMT BEEPS are nice too.

Thank you for all the great replies. I do like the military themed switchers. Kids will like it too.

As to the LionChief engines, do they work with a standard transformer? That's what I have now (the 80W one). I thought that the LionChief remotes control the engine and power has to be set to the track from a wall-wart.

LionChief engines run on AC or DC. They run fine with a standard transformer. Just keep the voltage below 20V. I run mine around 16V. The LionChief + with Bluetooth allows you to run the trains with a free smart phone app. 

Weighing-in on Dan's recommendations, for short cars you won't do any better than the Lionel disconnect cars.

Just some added thoughts to consider, and I speak as a budget-minded guy with a smaller layout also: 

1) While the Menard's cars are in the traditional category and attractively priced, the box car is larger than any traditional Lionel one. Their 4 bay hopper is on par with the Lionel one, but still bigger than what you might want. Lionel makes a smaller 2-bay hoper and an ore car, which is slightly smaller than any other brand. K-Line made rolling stock based on the older MARX tooling: These are 5000-series in number, and all these cars are slightly smaller and would look good on a small layout. There's a K-Line 5000 series 2-bay hopper that is even a little smaller than the Lionel one, which I happen to like.

These are also on a size par with the smaller postwar/MPC 027 sorts of rolling stock.

Another affordable consideration is the Industrial Rail cars, which are all smaller sized like the traditional Lionel O gauge cars. As a general rule, the MTH Railking cars are all larger in size and I avoid them, except for the MTH Rugged Rails cars. These cars have a 33- suffix number and are on a equal size to the Lionel traditional cars.

2) Any locomotive bought from a company no longer making trains may/will have potential problems with finding replacement parts in the future. This includes K-Line and RMT. But some of the starter set types of engines from K-Line sold in quantities, that you could buy a second one to have for parts. A place called Brasseur's bought the entire inventory of K-Line parts some years ago, but some of those parts are now sold out... like the coupler arm for the K-Line S-2 locomotive. The K-Line Plymouth switcher (pictured above) was a unique item and doesn't share parts with some of the other basic K-Line engines.

Still, the K-Line S-2's, MP-15's, RDC Budd Cars and the Alco FA's are pretty affordable, have just motors and reverse unit circuit board and share the same exact DC motor. The K-Line Collectors Club KCC MP-15 is probably one of the most affordable of the group because they made in excess of 20,000 of them (the number is likely higher, but that number was given to me mid-production year by someone at K-Line).

Added note: Though the basic K-Line / Lionel utilized Mabuchi brand DC motor look exactly identical, their gear teeth are different and so, NOT interchangeable. Plus side, most of these products sold in large enough quantities, that a second item could be affordable purchased to strip for parts.

3) If you have access to Lionel catalogs, pretty much any type of basic beginner starter type of engine made by Lionel from the late 1980's thru the early 2000's (pre-LionChief) will fit the bill on your description. They all have DC can motors and a circuit board reverse unit, though some Lionel ones came with a very basic electronic diesel horn. ANY OF THESE ARE AFFORDABLE as compared to other more modern engines.

There's a starter set NW-2 made in roads like (going by memory here) US Navy, US Coast Guard, B&M, Frisco, and others. This has a single DC motor power truck, but parts are still available.

There's what Lionel called a 44-ton switcher - really more of a center cab - which was made in Pennsy and Rock Island. Other than the cheap plastic handrails, the engine has two can motors.

Lionel made a bunch of Alco FA units for starter sets. The Santa Fe had a long production run. There was an Amtrak one too. New Haven also comes to mind. Sometime in the mid-1990's, these were made with a plastic instead of a sheet metal frame. The Reading and revised Amtrak come to mind as among the first with plastic frames.

Lionel made a slew of no-frills Industrial Switchers in the mid-1990's. Very basic (DC can motor and circuit board reverse unit), though I find it's useful to add some weight to these to pull a train of more than a couple cars.

There's also Williams and Williams by Bachmann. They make a version of the Lionel postwar 44 ton center cab. They also have their own version of the NW-2 switcher and their own version of the Lionel Alco FA. These are well made engines and affordable priced on the secondary market, though what the future holds for Williams is anyone's guess. This has been speculated on for years, but it sure does appear that Bachmann has little interest in the Williams line, but that's driven by the consumer.

The old K-Line alcos are nice, small, simple, easy to find and can be had for good prices. The Railking 027 F3s are nice, a little more robust than the K-Lines and are a little more expensive but not too bad. MTH, Lionel and K-Line rolling stock is reasonably priced and there is plenty out there. The three I mentioned also make/made small passenger cars that work great on small layouts.

MTH PS3 SW1500. Great engine with speed control so wonderful for switching:

PS-2 covered hoppers like the one just behind the engine are short. So are Railking modern tank cars as are the shorty ACF covered hoppers:

Ore cars are ideal for short. 

drabina posted:

Nothing too expensive as this is mostly for the kids. Not looking for a scale models.

Get a LionChief or LionChief Plus engine/set with its own hand held controller (nothing else needed).  I believe the kids will enjoy the hand held better than using a transformer handle.

Trainworld was blowing out Chuggington locos for ~$70. They have a full Williams twin motored chassis, will run on O-27 track and can pull anything you care to put behind them. If you wire the motors in series, they will be very well behaved.

Any NW or SW switcher (~ 12 inches) and some ore cars (~ 7 inches) may fit the bill for mining operation.  Measurements include couplers.

What, me worry?

These Lionel early LTI-era NW2s can be had new-old-stock (from 1989) for around $100 on eBay. They are the heavy die-cast PW version with the GG1 vertical motor and are excellent runners. They are bell-ringers which is easily disabled if found obnoxious:

They are bulletproof!

I think best bet is the either current offerings of Williams by Bachmann (WBB)  or 90's era lionel. Be aware that many of the other offerings may not have a horn.   As to inexpensive rolling stock, there is tons of it out there.   If you have access to a local hobby shop just walk in and look around.   O-Line in particular made sturdy inexpensive cars that were traditionally sized.  I would also check out RMT covered hoppers as they are a little short and rather rugged.

Thanks again for all the replies. I do like the the small military switches posted by Dan. There is an used one at a LHS and I found few online for not much money. That plus the Disconnect series of cars and I should be all set.