This is post #4 in my series of other activities to incorporate into your storytimes. We also talked about music, creative dramatics, and parachute activities.
There are lots of fun ways you can incorporate all kinds of puppets, from stick puppets you make yourself and the kids can wave during the story to putting on an actual puppet show. (A great book for one person puppet shows designed for storytime is Puppet Plays Plus: Using Stock Characters to Entertain and Teach Early Literacy, which allows you to use pretty much any puppets you have access to at home or in your library.) You can also perform simple puppet shows of picture books like Dear Zoo by Rod Campbell.