I have been gradually updating, adding to, and generally weeding the toy collection. The narrative/imaginative play toys are getting early literacy and play tip sheets and being renamed Imagine a Story. I try to make sure the items do not cost more than $20, as I feel that defeats the purpose of offering toys to families who can't afford their own. I also try to get things that can be easily cleaned and lend themselves to imaginative play.
The toys can be played with in the library or checked out. They are also available to other libraries to request and schools can request them as well. My staff disinfect them each time they are returned (er, theoretically, I should really check up that they're doing that...) and we regularly check the bags to make sure all the pieces are in the correct place. I did remove the costumes and make them into a dress-up corner - they were getting very gross.
This collection dates before I arrived at the library in 2008 and I have been steadily adding to it over the past several years. The final (hopefully) updates are happening now in 2016.