One of the most fun activities we have done so far (and without a doubt the most fun grammar activity we have ever done) is contraction surgery. The kids had a blast and I think really learned what a contraction is, which letters are removed, and how the apostrophe holds the new word together.
Because we have all kinds of medical supplies on hand and the girls love playing doctor and nurse, we laid out blue sterile clothes and donned surgical masks. The girls were given two words on large pieces of paper. They cut out the letters to be removed and put them in the trash. We used band-aids for apostrophes (this activity takes a lot of band-aids, so buy the cheapest ones you can find).