My students have loved this puppet stage for years. It is made from a science fair tri fold board. You can find them at Wal-Mart and Hobby Lobby (they will run these 1/2 off, so be on the look out!). I simply cut a window from the middle panel with an exacto knife. Using remenants of fabric, I added curtains. All done! We are ready to go.
Oriental Trading carries sets of religous puppets that will fit on a small child's hand and then easily stores in a rubbermaid container.
I use this as a center at the beginning of class time. The students are told to use the puppets to recreate the Bible stories we have learned. This is a very popular center with my kids and can be a great reteaching tool. When a child can put a Bible story in their own words, they have got it!