Hi Kel
My eldest daughter started Prep this year. It is a play based program, but they do try to include them in the rest of the school. (at least at our school they do) They go to music, HPE and Library classes and join in with the school for assembly. At our school they mix with the grade 1's and 2's at play time, and they still have a rest time.
I think they are pushing our littlies to grow up a little too fast, but my daughter really loves it, and enjoys being a part of the 'big school'. (If it were up to me i would be happy for her to attend kindy for the next 12 years lol!)