I came across a fun, inexpensive, edible manipulative today in the chip aisle at H.E.B.
These were "store brand," so if you don't live near an H.E.B. grocery store, there may be other store brands of them available. I was pretty impressed with how well the uppercase letters were shaped.
Of course, there are the usual precautions to consider if using a food as a classroom material. I would probably only use them in small groups and I would wear disposable gloves so that I could hand children the letters to make their names, help them sort letters according to straight and curved lines, etc. The kids would definitely want to eat some at the end of the activity!
Parents at home could have a great time with games like if you can name the letter you may eat it...
What would you do with them?