Source: Hasbro Hasbro is celebrating the tenth anniversary of its Furreal Friends line with the introduction of Baby Butterstoch, a smaller version of the life-size Butterscotch pony it sold in 2006. Butterscotch will sell for more than $100.

Are parents more willing to splurge on toys for their kids? Toymakers think so.

That was one of the most notable takeaways from this week’s 109th American International Toy Fair in New York.

Toy companies are playing to the extremes. As you walked around the booths of the Jacob K. Javitz Center or visited company showrooms throughout the city, you were sure to find lots of little, low-priced collectible toys as well as bigger, more elaborate items priced above $100 mark. That’s a big step up when you consider the average price of a toy these days is $8.

It’s also interesting because it follows a year of declining toy sales in the U.S. According to market research NPD Group, U.S. retail sales of toys generated $21.18 billion in 2011, a 2 percent decline from the $21.68 billion in toy sales rung up in 2010.

Despite declining U.S. sales, global sales of toys rose about 2 percent, and there are signs that American consumers may be willing to loosen their purse strings and spend more.

NPD research showed Americans are making trade-offs. Parents may buy one pricier toy instead of buying several mid-to-lower priced items, or they will spend more on toys for their own children but buy fewer toys for children outside their immediate family.

The Toy Industry Association is calling the trend “Save and Splurge.” The idea is to find toys that children will keep coming back to again and again or that have a certain “wow” factor.

Photo by Adam Jeffery for CNBC.com This Teenage Mutan Ninja Turtle playset is another example of a product that will test parent's desire to splurge. It will retail for more than $100.

“I think it’s a matter of needing to have creative toys,” said Carter Keithley, president of the Toy Industry Association, in an interview with CNBC. “That has always been what has driven the toy industry.”

And it’s true that last year there wasn’t one hot holiday toy to drive parents into the store.

TIA also identified five other top trends in the industry right now, and we saw examples of each at the show.

Generation App: Perhaps the most visible trend at this year’s Toy Fair was the proliferation of toys that interact with smartphones and tablets. Toymakers are using technology to enhance classic play patterns — not erase them, according to Adrienne Appell, a TIA spokeswoman.

Photo by Adam Jeffery for CNBC.com From app to game and back again, the Angry Birds brand has come full circle.

Take the popular Angry Birds game. Last year, Mattel 

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[MAT  Loading...      ()   ] brought it to the physical world with a board game based on the app. Other companies licensed the brand and made plush toys and other items. Now, Mattel is bringing Angry Birds back to the virtual world with a new game that uses play pieces that interact with the smart devices.

Others are developing games that incorporate physical toys, or they are using new apps to help develop new brands of toys.