I am a firm believer that imagination is a very important part of child development. Fantasy, pretend play and creativity are linked to adult abilities. In this day and age, our children don't get as much of this. As a parent and now a grandparent, I have always built this into the way I interact with children.
I came across this article, I am quoting a part of it and linking the full article for your use and reading pleasure. It really supports my personal perspective and goes on to explain ways to expand your child's imagination.